Agricultural Biotechnology: Economic and International Implications

Over the last 150 years, agriculture has been subject to several waves of innovation which have significantly altered its institutional structures, its products and the way it is practised. Mechanical, biological and chemical innovations have, in turn, reduced labour requirements, increased yields and reduced the impact of agricultural pests. More recently, computer and remote sensing technologies have improved input precision. Agricultural biotechnology is now emerging as a wellspring of innovations that will reshape agriculture as profoundly as any previous innovation paradigm.' This new technology has unique features which economists need to understand in order to formulate appropriate policy advice. This paper has two main purposes. First, we provide an overview of agricultural biotechnology. There are lessons from medical biotechnology which can be applied to agriculture. In addition, there are new institutions, including technology transfer offices and arrangements for intellectual property rights, which will be introduced and discussed. The second purpose is to introduce some basic analytical considerations and methodological issues which will be important in the study of biotechnology. In particular, these methodologies will relate to the issues in industrial organization associated with the process of product research, development and introduction; issues associated with adoption of biotechnology; and issues associated with pricing. Thus far, commercial biotechnology has been concentrated in the United States, but this technology has important global implications. This paper will examine and project what the American experience implies for the rest of the world and show how biotechnology and its evolution fit within the context of the relationship between developed and developing nations