Determinants of Comparative Advantage in GMO Intensive Industries

Abstract

AbstractThis paper examines the supply-side determinants of international trade in crops that are intensive in genetically modified organisms (GMOs). The theoretical framework is a variant of the Heckscher–Ohlin model, which we estimate using cross-country data for 1995 and 2010 to examine soybeans, maize, and cotton trade. The data include measures of country land endowments, which we disaggregate into GMO and non-GMO components, as well as recently released measures of GMO regulations. Findings show land endowments are a primary source of comparative advantage in GMO intensive industries before and after the advent of GMOs. Further, an increase in a country's allocation of land to GMO crops has a positive effect on her net exports in GMO intensive industries. This positive effect occurs both across countries and time. Finally, a country's GMO regulations have a negligible effect as a supply-side determinant of comparative advantage. However, a country's decision about whether to adopt GMO technologies does matter to trade. These findings are robust with respect to a variety of considerations.