Economic Cost and Returns from Research and Development: The Case of Chili in Bangladesh

The study estimated the benefit and rate of returns to investment on chili research and development (R&D) in Bangladesh. The Economic Surplus Model with ex-post analysis was used to determine the returns to investment and their distribution between production and consumption. Several discounting techniques were also used to assess the efficiency of chili research. The adoption rate showed an increasing trend over the period. The yield of modern variety, BARI-Chilli-1, developed by the Bangladesh Agricultural Research Institute (BARI) was 72 percent higher than that of the local variety. Society received a net benefit of BDT 813.12 million (USD 10.42 million) from investment in chili R&D. The net present value and present value of research cost were estimated at BDT 289.14 million (USD 3.71 million) and BDT 78.49 million (USD 1.01 million), respectively. The internal rate of return and benefit cost ratio were estimated to be 55 percent and 5.48, respectively. This indicates that investment in chili R&D was profitable. The seed production program for BARI-Chilli-1 should be done to increase production by increasing its area of adoption.