Skip to main content

We use cookies to distinguish you from other users and to provide you with a better experience on our websites. Close this message to accept cookies or find out how to manage your cookie settings.

Close cookie message
Cancel
×
×
Home
  • Home
Article

Determinants of Comparative Advantage in GMO Intensive Industries

  • PAMELA J. SMITH (a1), BOLORMAA JAMIYANSUREN (a1), AKINORI KITSUKI (a2), JOOYOUNG YANG (a3) and JAESEOK LEE (a1)...
Abstract

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.

Copyright
COPYRIGHT: © Pamela J. Smith et al. 2017 
Corresponding author
*Email: psmith@umn.edu (corresponding author)
Footnotes
Hide All

The authors extend thanks to Derya Eryilmaz and Harshada Karnik for their research assistance during early stages of this paper. The authors also thank Robert Kudrle and other participants in the Seminar Series of the Freeman Center for International Economic Policy, Hubert H. Humphrey Institute of Public Affairs, University of Minnesota (October 2013) for their comments.

Footnotes
References
Hide All
Anderson, K. (2010), ‘Economic Impacts of Policies Affecting Crop Biotechnology and Trade’, New Biotechnology, 27(5): 558–564.
Anderson, K., Jackson, L. A., and Nielsen, C. P. (2005), ‘Genetically modified rice adoption: implications for welfare and poverty alleviation’, Journal of Economic Integration, 20(4): 771–788.
Anderson, K., Valenzuela, E., and Jackson, L. A. (2008), ‘Recent and prospective adoption of genetically modified cotton: a global computable general equilibrium analysis of economic impacts’, Economic Development and Cultural Change, 56(2): 265–296.
Basu, A. K. and Qaim, M. (2007), ‘On the adoption of genetically modified seeds in developing countries and the optimal types of government intervention’, American Journal of Agricultural Economics, 89(3): 784–804.
Beckmann, V., Soregaroli, C., and Wesseler, J. (2006), ‘Coexistence rules and regulations in the European Union’, American Journal of Agricultural Economics, 88(5): 1193–1199.
Choi, E. K. (2010), ‘International trade in genetically modified products’, International Review of Economics and Finance, 19(3): 383–391.
Demont, M. and Devos, Y. (2008), ‘Regulating the coexistence of GM and non-GM crops without jeopardizing economic incentives’, Trends in Biotechnology, 26(7): 353–358.
Desquilbet, M. and Bullock, D. S. (2009), ‘Who pays the costs of non-GMO segregation and identity preservation?’, American Journal of Agricultural Economics, 91(3): 656–672.
Disdier, A.-C. and Fontagne, L. (2010), ‘Trade impact of European measures on GMOs condemned by the WTO Panel’, Review of World Economics, 146(3): 495–514.
Esty, D. C. and Porter, M. E. (2001), ‘Ranking national environmental regulations and performance: A leading indicator of future competitiveness?’, in Porter, M. E., Sachs, J., and Warner, A. M. (eds.), The Global Competitiveness Report 2001, New York: Oxford University Press.
Frisvold, G. B., Reeves, J. M., and Tronstad, R. (2006), ‘Bt cotton adoption in the United States and China: international trade and welfare effects’, AgBioForum, 9(2): 69–78.
Gaisford, J. D., Hobbs, J. E., and Kerr, W. A. (2007), ‘Will the TRIPS agreement foster appropriate biotechnologies for developing countries?’, Journal of Agricultural Economics, 58(2): 199–217.
Gruère, G. P., Carter, C. A., and Farzin, Y. H. (2009), ‘Explaining international differences in genetically modified food labeling policies’, Review of International Economics, 17(3): 393–408.
Hareau, G. G., Norton, G. W., Mills, B. F., and Peterson, E. (2005), ‘Potential benefits of transgenic rice in Asia: a general equilibrium analysis’, Quarterly Journal of International Agriculture, 44(3): 229–46.
Heckscher, E. (1919), ‘The effects of foreign trade on the distribution of income’, Ekonomisk Tidskrift, 21(2): 1–32.
James, C. (2011), ‘Global status of commercialized biotech/GM crops: 2011’, International Service for the Acquisition of Agri-biotech Applications, ISAAA Brief No. 43, ISAAA, Ithaca, NY.
James, C. (2014), ‘Global status of commercialized biotech/GM crops: 2014’, International Service for the Acquisition of Agri-biotech Applications, ISAAA Brief No. 49, ISAAA, Ithaca, NY.
James, C. (2015), ‘20th Anniversary (1996–2015) of the Global Commercialization of Biotech Crops and Biotech Crop Highlights in 2015’, International Service for the Acquisition of Agri-biotech Applications, ISAAA Brief No. 51, ISAAA, Ithaca, NY.
Just, R. E., Alston, J. M., and Zilberman, D. (eds.) (2006), Regulating Agricultural Biotechnology: Economics And Policy, New York: Springer.
Kalaitzandonakes, N., Alston, J. M., and Bradford, K. J. (2007), ‘Compliance costs for regulatory approval of new biotech crops’, Nature Biotechnology, 25: 509–11.
Leamer, E. E. (1984), Sources of International Comparative Advantage: Theory and Evidence, Cambridge, MA: MIT Press.
Lence, S. H. and Hayes, D. J. (2005), ‘Genetically modified crops: their market and welfare impacts’, American Journal of Agricultural Economics, 87(4): 931–950.
Ohlin, B. (1933), Interregional and International Trade, Cambridge, MA: Harvard University Press.
Perez, O. (2007), ‘Anomalies at the precautionary kingdom: Reflections on the GMO panel's decision’, World Trade Review, 6(2): 265–280.
Plastina, A. and Giannakas, K. (2007), ‘Market and welfare effects of GMO introduction in small open economies’, AgBioForum, 10(2): 104–123.
Pray, C. E., Bengali, P., and Ramaswami, B. (2005), ‘The cost of biosafety regulations: the Indian experience’, Quarterly Journal of International Agriculture, 44(3): 267–289.
Pray, C. E., Ramaswami, B., Huang, J. K., Bengali, P., Hu, R., and Zhang, H. (2006), ‘Costs and enforcement of biosafety regulation in India and China’, International Journal of Technology Globalization, 2(1/2): 137–157.
Qaim, M. (2009), ‘The economics of genetically modified crops’, Annual Review of Resource Economics, 1(June): 665–694.
Rybczynski, T. M. (1955), ‘Factor endowments and relative commodity prices’, Economica, 22(88): 336–341.
Smith, P. J. (2014), Global Trade Policy: Questions and Answers, Chichester: John Wiley &Sons.
Smith, P. J. and Katovich, E. S. (2017), ‘Are GMO policies “trade related”?: Empirical analysis of Latin America’, Applied Economic Perspectives and Policy, 39(2): 286–312.
Swinnen, J. F. M. and Vandemoortele, T. (2011), ‘Trade and the political economy of food standards’, Journal of Agricultural Economics, 62(2): 259–280.
Tothova, M. and Oehmke, J. F. (2005), ‘Whom to join? The small-country dilemma in adopting GM crops in a fragmented trade environment’, Quarterly Journal of International Agriculture, 44(3): 291–310.
Tothova, M. and Oehmke, J. F. (2004), ‘Genetically modified food standards as trade barriers: harmonization, compromise and sub-global agreements’, Journal of Agricultural and Food Industrial Organization, 2(2): 1–16.
Trefler, D. (1995), ‘The case of missing trade and other mysteries’, American Economic Review, 85(5): 1029–1046.
Trefler, D. (1993), ‘International factor price differences: Leontief was right!’, Journal of Political Economy, 11(2): 207–224.
Vanek, J. (1968), ‘The factor proportions theory: the N-factor case’, Kyklos, 21(4): 749–756.
Veyssiere, L. (2007), ‘Strategic response to GMOs by GM-free countries’, European Review of Agricultural Economics, 34(3): 365–392.
Vigani, M., Raimondi, V., and Olper, A. (2012), ‘International trade and endogenous standards: the case of GMO regulations’, World Trade Review, 11(3): 415–437.
Vigani, M. and Olper, A. (2013), ‘GMO standards, endogenous policy and the market for information’, Food Policy, 43: 32–43.
Young, A. R. (2011), ‘Of executive preference and societal constraints: the domestic politics of the transatlantic GMO dispute’, Review of International Political Economy, 18(4): 506–529.
Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

World Trade Review
  • ISSN: 1474-7456
  • EISSN: 1475-3138
  • URL: /core/journals/world-trade-review
Please enter your name
Please enter a valid email address
Who would you like to send this to? *

CAPTCHA *

Skip to the audio challenge
×
Type Description Title
PDF
Supplementary materials

Smith supplementary material
Smith supplementary material 1

 PDF (239 KB)
239 KB

Metrics

Full text views

Total number of HTML views: 3
Total number of PDF views: 58 *
Loading metrics...

Abstract views

Total abstract views: 512 *
Loading metrics...

* Views captured on Cambridge Core between 20th July 2017 - 13th June 2018. This data will be updated every 24 hours.

Cancel
Confirm
×