trade – Pamela J. Smith

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.

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.