AN EMPIRICAL INVESTIGATION OF THE PRODUCTION EFFECTS OF ADOPTING GM SEED TECHNOLOGY: THE CASE OF FARMERS IN ARGENTINA



Introduction

During the 1990s, the market for biotechnology in the agricultural and pharmaceutical
sectors became a major international economic force1. One of the key factors influencing
this market success is the investment in research and development (R&D) of new seed
varieties2. In the last decades investment in R&D switched from state-sponsored to
private funding (Fernandez-Cornejo, 2004). At the same time, the market moved toward
a strong concentration in a few multinational firms, which now control most of the
biotechnological R&D around the world (RAFI, 1999 and Sirinivasan, 2003). These
changes are happening at the same time that a revolution is advancing biotechnology
within agricultural and pharmaceutical industries (Fernandez-Cornejo, 2004). In this new
environment, with extensive private participation in the international market, the
protection of intellectual property rights and its role in shaping the biotechnology market
has been highly debated (Kesan, 2000; Kesan and Janis, 2001; Swanson and Goschl,
2000; Janis and Kesan, 2002; Goldsmith, Ramos and Steiger, 2002; Goldsmith, 2001;
Lesser, 1998; Moschini, 2001; Moschini and Lapan, 1997; Rohrbach, Minde and
Howard, 2003; Alston and Venner, 2002; Frisvold, Sullivan and Raneses, 2003; Graff,
Rausser and Small, 2003 and Diez, 2002). Governments, international organizations, the
private sector (firms and farmers), scholars and scientists are discussing how changes
affect the market for seeds and how property rights should be defined and enforced to
promote social welfare (Fernandez-Cornejo, 2004). To promote and protect their
investments in companies abroad, developed countries have tried to enforce intellectual
property rights over new seed varieties in developing countries. On the other hand,

1 “The ISAAA projects that the global market value of transgenic crops will increase from between $4.5
billion and $4.7 billion in 2003, to $5 billion or more in 2005. In 2002, the global market was estimated at
$4 billion, representing 15 percent of the $31 billion global crop protection market and 13 percent of the
$30 billion global commercial seed market. The ISAAA says the estimated market value is based on the
sale price of transgenic seed plus any technology fees that apply.” Doris de Guzman, Surge in US Biotech
Crops Continues, Chemical Market Reporter, New York, V. 265, I. 15 April 12th 2004, at 13.

2 The high cost of research and development is a limiting factor in emergence of biotechnology products:
“Biotechnology is an expensive market to break into. Sources estimate that biotechnology research and
development (R&D) costs more than $200 million for just one product....[G]etting a biotech drug to

market is a difficult and expensive process. After years of laboratory research, hurdles consisting of clinical
trials and governmental approval must be crossed before a drug can even make it to market.” Jay P. Kesan,
Intellectual Property Protection and Agricultural Biotechnology: A Multidisciplinary Perspective, 44 Am.
Behav. Scientist 464, 465-66 (2000) (citation omitted).



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