Genetically Modified Organisms (GMOs)

July 11, 2024July 24, 2024

Are GMO policies “trade related”? Empirical analysis of Latin America

This paper empirically examines whether GMO policies are “trade related” for countries in Latin America (LA). First, we use the Balassa index to assess the “revealed comparative advantage” of LA countries. We find that LA countries have a revealed comparative advantage in GMO industries relative to the world, and that intra-regional trade in these industries is modest relative to external trade. Second, we estimate the Gravity model to examine the effects of importers’ GMO policies on Argentina and Brazil’s bilateral exports of soybeans and maize. We find that strong GMO policies in importers have a negative effect on Argentina’s bilateral exports of soybeans (an industry and country with historically high GMO content). Further, we find that past GMO policies are a strong determinant of Argentina’s future bilateral exports, and that the negative trade effects of strong GMO policies are increasing over time. In contrast, we find a weaker relationship between the GMO policies of importers and Brazil’s bilateral exports (consistent with Brazil’s more recent increases in GMO content). These findings for Argentina and Brazil provide a benchmark for other developing countries that are looking for guidance on servicing trading partners with diverse GMO policies.

Citation:

Smith, Pamela J., and Erik E. Katovich. 2017. Are GMO policies “trade related”? Empirical analysis of Latin America. Applied Economic Perspectives and Policy 39 (2): 286-312.

June 24, 2024July 24, 2024

Determinants of comparative advantage in GMO-intensive industries

This paper examines the supply-side determinants of international trade in crops that are intensive in genetically modified organisms (GMOs). The theoretical framework is a variant of the Heckscher-Ohlin model which we estimate using cross-country data for 1995 and 2010 to examine soybeans, maize, and cotton trade. The data include measures of country land endowments which we disaggregate into GMO and non-GMO components, as well as recently released measures of GMO regulations. Findings show land endowments are a primary source of comparative advantage in GMO intensive industries before and after the advent of GMOs. Further, an increase in a country’s allocation of land to GMO crops has a positive effect on her net exports in GMO intensive industries. This positive effect occurs both across countries and time. Finally, a country’s GMO regulations have a negligible effect as a supply-side determinant of comparative advantage. However, a country’s decision about whether to adopt GMO technologies does matter to trade. These findings are robust with respect to a variety of considerations.

Citation:

Smith, Pamela J., Bolormaa Jamiyansuren, Akinori Kitsuki, Jooyoung Yang and Jaeseok Lee. 2018. Determinants of comparative advantage in GMO-intensive industries. The World Economy 17 (3): 427-449.

May 1, 2022July 24, 2024

Intellectual property rights and trade: The exceptional case of GMOs

This paper examines how foreign intellectual property rights (IPRs) affect US bilateral exports of genetically modified crops (GMOs). We apply the structural gravity model to examine GMO trade between the United States and the countries that comprise the rest of the world. Our econometric method includes the Poisson Pseudo Maximum Likelihood estimator. We use panel data including measures of countries’ IPR regimes, plant patentability, plant variety rights, GMO regulations and asynchronous approvals of GMOs. Results show the United States tends to export fewer GMO crops to countries with strong IPR regimes, plant patentability and plant variety rights. These results are consistent with the market power effect, where the United States restricts exports to countries with strong protections to extract monopoly prices. Second, enforcement of IPRs strengthens the market power effect. Third, the market power effect is strong alongside with GMO regulations and asynchronous approvals. Fourth, the market power effect is larger for self-pollinating crops vs. hybrids. These findings are robust across a variety of specifications. However, we also find a price premium in countries with less ease of US market access, with more domestic production of GMOs, and with weak traceability requirements. These features play a stronger role than IPRs in determining price.

Citation:

Smith, Pamela J., and Xiangwen Kong. 2022. Intellectual property rights and trade: The exceptional case of GMOs. The World Economy 45 (3): 763-811.

April 1, 2022July 24, 2024

Patents for self-replicating technologies: Game theoretic analysis of genetically modified seed

This paper examines the implications of patents for farmers’ decisions to use genetically modified (GM) seed versus traditional non-GM seed. We consider a game theoretic approach employing the replicator equation to assess the conditions for farmers’ adoption decisions. The results show that farmers may choose GM seeds even when this decision leads to lower profits than using traditional seeds. This result emerges because of the self-replicating characteristic of the technology of seeds and their dispersion via acts of nature and/or intentional infringement. This result is robust across our baseline model and extended model that includes the option for farmers to intentionally infringe upon the GM seed technology. This result is also robust with respect to a wide range of initial conditions and parameter values representing economic conditions including the dispersal of the GM technology, monitoring effort, payoffs of GM seed relative to traditional seed, cost of patent infringement, cost of contamination, and added cost of legally using GM seed.

Citation:

Smith, Pamela J., and Andrew R. Tilman. 2020. Patents for self-replicating technologies: Game theoretic analysis of genetically modified seed. Journal of World Intellectual Property Rights 23 (3-4): 166-184.