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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.

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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.

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World Trade Review
  • ISSN: 1474-7456
  • EISSN: 1475-3138
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