The Role of the Private Sector in Transferring Hybrid Corn Technology

Abstract

It is widely accepted that new technology is an important source of agricultural growth. Developing countries have tried a variety of policies to accelerate the development and diffusion of new technology. These policies include: (1) government investment in agricultural research and extension, (2) tax breaks and other incentives to private companies that conduct agricultural research, and (3) incentives to transfer new technology developed outside the country. At the same time, many countries have other policies that reduce the incentive of private companies to do research or transfer technology. These include restrictions on importing technology and importing research inputs, restrictions on which companies are allowed to do research, and regulations that reduce the profitability of innovation. The opposite side of this issue is the U.S. farmer's complaint that multinational companies are transferring U.S. technology to other nations. Some farmers and their representatives argue that this transfer of technology hurts American farmers by increasing the productivity of our competitors and reducing the amount of U.S. grain demanded by importing nations. There are reports of attempts by U.S. farmers to restrict the outflow of technology by restricting seed exports. At present, the debate about these issues is hampered by the absence of empirical studies on the importance of these flows of technology or the impact of policies on these technology transfers. In practical terms, it is not clear how much technology can be transferred directly and how much has to be substantially modified before it can be used in a new country. Without such information, it is impossible to determine how important policies which impede the flow of material technology like seeds or chemicals will be or whether foreign research will make these technologies available anyway. In this paper, we have attempted to measure the impact of public sector research, the transfer of technology embodied in a product, and private sector research by multinationals on one major crop - corn. The results indicate that technology transfer through trade and private sector research by multinational seed companies play an important role in increasing agricultural productivity.