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