Genetically Modified Rice, International Trade, and First-Mover Advantage: The Case of India and China (original) (raw)

Abstract

During the last decade, a number of Asian countries have been actively developing programs of research on genetically modified (GM) crops (Runge and Ryan, 2004). Some of these countries have developed biosafety regulatory frameworks, but until now only a few have approved one or more GM crops. Empirical studies have shown that the introduction of Bt cotton in China and India have generated income gains for farmers overall (e.g., Bennett et al., 2004, Pray et al., 2002). But these two countries only approved the large scale production of GM cotton, in part because unlike other GM crops, the main products of cotton are not used for food, and thus are not subject to food safety approval and labeling regulations in major importing countries. In particular, neither Japan nor the European Union (EU) directly regulates textile products derived from GM cotton. In fact, most Asian countries that have invested in research and regulations on GM food crops are confronted with three possible alternatives: 1) allowing the production of GM food crops with the risk of losing potential exports, 2) rejecting the commercialization of any GM food crop, 3) producing both GM and non-GM food crops separately at a marketing cost. At the same time, they have to take into account the potential opportunity cost of rejecting the technology when other competitors adopt it (Elbehri and MacDonald, 2004; Berwald et al., 2006). In the last few years, China has been conducting field trials of different varieties of GM rice but has delayed a decision on its formal approval. At the same time, India has been actively conducting public research on GM rice, but many officials appear reluctant to see its introduction. India's rice exports to sensitive markets are significant, but non-GM rice segregation could help preserve its exports while allowing the rest of the country to use GM rice * The authors wish to thank Rowena Valmonte-Santos, Liang You, Cynthia Rossi, and Purvi Mehta-Bhatt, for their help and contributions at various stages of the first phase of the project on productivity modeling. They would also like to thank all the participants to the meetings in the five cities in India.

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