Trade implications of biotechnology in developing countries: A quantitative assessment

Abstract

The effects of biotechnological advances on the employment and income of the rural labour force in developing countries may be analysed by means of estimates and scenarios. Improved varieties of crop could help increase physical output and therefore the income and employment opportunities for rural workers/producers. The results, however, are not obvious, especially for the small, poorer farmers and wage workers restricted to marginal areas in developing countries. Biotechnology developments could lead to changes in the international trade pattern by enhancing the possibilities for crop substitution, by the introduction of new plant characteristics, by changes in food processing such as improvements in the fermentation and enzymatic processes or by the industrial production of synthetic substitutes of plants or their components. The development of tropical plants tailored to meet the specific needs of processing countries' industry and consumers is likely to lead to overproduction, declining prices and economic and social instability in Third World exporting countries. The employment and income implications of such substitution depend on the quantitative significance of these displacements. A decrease in the labour force requirements may accrue even if the internal consumption and production increase at the expected rates. The replacement of export crops by a more labour-intensive production of selected basic grains may generate a net gain in employment. The net employment effects of biotechnology-induced substitution for tropical crops will depend on the alternative production activities adopted by the affected producers and workers to overcome the adverse impact and on the relative labour coefficients of the crops involved in the substitution and diversification.