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Humboldt-Universität zu Berlin - Lebenswissenschaftliche Fakultät - Quarterly Journal of International Agriculture

Quarterly Journal of International Agriculture No. 3/05


Whom to join? The small country dilemma in adopting GM crops in a fragmented trade environment

Monika Tothova and James F. Oehmke
Michigan State University, East Lansing, MI, USA


Abstract

The opposing US and EU positions regarding genetically modified (GM) crops threaten to polarize the world into countries that accept biotechnology and countries that do not. The developing countries face a dilemma of which “club” to join: adopt GM crops to improve domestic food security and potential exports to new markets or refuse GM crops to maintain current or potential export markets. This paper develops an economic model of international trade in products with differing quality characteristics and applies the model to trade in GM crops. The model explains the emerging standards, trade patterns and club behavior. Results suggest that as more countries make decisions regarding GM crops, there will be a further bifurcation of countries into those that accept GM crops and those that do not.

Keywords: biotechnology, developing countries, genetically modified organisms, standards, trade agreements

JEL: Q 130

Vol. 44 (2005), No. 3: 291-310