By Luke Baker
BRUSSELS (Reuters) - The world needs at least to double its spending on agricultural research if it is to produce reliable crops and improve the lives of the one billion people who battle starvation every day, Bill Gates said in an interview on Tuesday.
A day before flying to Davos to meet political and business leaders, Gates said he was concerned the austerity drive in Europe could lead to a fall in foreign aid spending, setting back the fight against poverty, hunger and disease.
While acknowledging the difficulties policymakers in the richer world face at a time of slumping growth, the world's second wealthiest man said now was the time to invest in research and development.
"The big choice is whether the crisis in the rich-country governments will cause them to stop increasing the aid that's been so key to reducing disease, improving food availability for the poorest, and bringing down the number who suffer from AIDS or malaria or malnutrition," Gates told Reuters in Brussels, where he met EU officials.
Referring to agricultural research, he said it was shocking - as well as short-sighted and potentially dangerous - that only $3 billion is spent each year on seeking to improve the seven most important staple crops on which the poor depend.
"The number should easily be double what it is," Gates said of research spending while underlining there had been an increase in investment by the private sector.
"Capitalism always has a challenge that research is not funded as well as it should be. That is, that the innovator can't capture enough of the benefit to society. So they tend to be risk-averse, and that's why basic research - medical basic research, agriculture basic research - has to be funded by governments."
European governments have been among the most generous in providing aid - more than half the world's aid spending comes from European or EU-level budgets - but there is no guarantee it will go on rising during the economic downturn.
Europe's aim is to raise its aid spending to 0.7 percent of gross domestic product by 2015. Some countries are lagging and nations such as Italy are not best placed to hit the target.
That in turn can have a direct impact on improving the lives of the one billion people - 15 percent of the global population - living in poverty and hunger.
"If you don't fund $300 a year, you can't put a person on AIDS drugs. If you don't buy a bed-net, then there's additional children who die of malaria. If you don't fund the agricultural system, you leave these billion that wake up every day wondering if they're going to get enough food," said Gates.
"The benefit of this money is in a league of its own compared to other government spending."
There can also be a pay-off in terms of security and cost-saving elsewhere in richer countries' budgets. Poverty, disease and hunger frequently go hand in hand with political instability and the geopolitical insecurity that can foster.
"The national security and economic opportunity benefits of helping these countries out is quite significant," said Gates, who gave up day-to-day running of Microsoft in 2000 and set up the Bill and Melinda Gates Foundation with his wife.
"It's a huge cost when you have instability. You've got to look at upping defense budgets and the human cost that creates, and so we need to be able to justify this not only on a humanitarian ground, although that alone should be enough.
"But we need to be able to tell the story of where it stands in terms of security and economic development as well."
CAPITALISM UNDER EXAMINATION
With a fortune estimated at $56 billion while also heading one of the world's most generous foundations, Gates straddles the gap between the globe's super-rich and those battling to survive.
"Capitalism has done a fantastic job," he said. "The state of the world 300 years ago versus where we are today - you've got to certainly say that capitalism was one of the elements that came into that - scientific understanding, reduction in violence.
"We have some pretty dramatic understanding that capitalism can provide food and access to information at really phenomenal levels, and that's why it's a little disappointing why the equity element has lagged as much as it has," he said, referring to the fact many basic needs are not being met.
"But it's about tuning societal expectations and aid policies far more than going back to the basic mechanism that inspires people to try new things... Overall those innovations are changing lives at a faster rate today than ever before."
Gates, who has pledged to give away the bulk of his fortune, hopes that over time more super-wealthy people will follow his example.
"I have a view that they are missing out if they don't do it," he said. "(Philanthropy) can't be a substitute for government delivery. What governments do in education delivery, aid delivery, that's still a primary function.
"But more philanthropy will drive the pace of innovation for all these activities."
(Writing by Luke Baker; editing by Robert Woodward)