INTERNATIONAL TRADE AND TECHNOLOGY POLICIES

• Sponsoring Institution: State Agricultural Experiment Station
• Project Status: TERMINATED
• Funding Source: STATE
• Reporting Frequency: Annual
• Accession No.: 1006992
• Project No.: MIN-14-172
• Project Start Date: Jul 6, 2015
• Project End Date: Jun 30, 2020

Project Director
Smith, P.

Recipient Organization
UNIV OF MINNESOTA
(N/A)
ST PAUL,MN 55108

Performing Department
Applied Economics

Non Technical Summary
NON-TECHNICAL SUMMARYThe purpose of this project is to examine contemporary issues concerning international trade and technology policy that have significant impacts on the economic welfare of human beings. The project includes research on five broad and overlapping questions: (1) What are the implications of patents for farmers' decisions to use genetically modified seed vs. traditional non-genetically modified seed? (2) What are the supply-side determinants of international trade in crops that are intensive in genetically modified organisms? (3) What are the effects of intellectual property rights on the economic growth of countries? (4) To what extent are country policies toward genetically modified organisms "trade related?" (5) What are the welfare effects of national and international policy options that support economic development through international technology transfers?The economic methods will varying to fit the project goals and questions described above. The theoretical approaches include game theory, general equilibrium models of international trade (including the Heckscher-Ohlin and Gravity models), macroeconomic growth model, and benefit-cost analysis, respectively. The prominent empirical approach is to examine the questions thematically for all countries that comprise the global economy. Thus, the research will rely primarily on panel data which are detailed by country, by year, and by industry (as appropriate to the model).The ultimate goals of the project are to examine the effects of policy decisions (e.g., intellectual property rights, GMO regulations, technology transfer policies) on the economic welfare of stakeholders at the national and global levels. Stakeholders include consumers, producers (e.g., farmers), innovators (e.g, seed firms), and governments within national communities and globally.

Animal Health Component

0%

Research Effort Categories

Basic

50%

Applied

50%

Developmental

(N/A)

Classification

Knowledge Area (KA)	Subject of Investigation (SOI)	Field of Science (FOS)	Percent
606	6120	3010	100%

Knowledge Area
606 - International Trade and Development;

Subject Of Investigation
6120 - International economy and sectors thereof;

Field Of Science
3010 - Economics;

Keywords

international

trade

and

technology

policy

Goals / Objectives
GOALSThe over-arching goal of the project is to analyze contemporary and frontier issues concerning international trade and technology policy. Specifically, the project will contribute to scholarly knowledge at the nexus of the subjects of: (a) intellectual property rights; (b) genetically modified organisms; (c) international trade; (d) economic growth; (e) international economic development; and (f) international technology transfers.The objectives of the proposed research are to examine the following:Implications of patents for farmers' decisions to use genetically modified seed vs. traditional non-genetically modified seed.Supply-side determinants of international trade in crops that are intensive in genetically modified organisms.Effects of intellectual property rights on the economic growth of countries.Extent to which country policies toward genetically modified organisms are "trade related."The welfare effects of national and international policy options that support economic development through international technology transfers.

Project Methods
METHODSThe economic methods will vary to fit the project goals as summarized below.1. Implications of patents for farmers' decisions to use genetically modified (GM) seed vs. traditional non-GM seed. The small existing literature on patents and adoption decisions includes two themes. One theme considers the implications of patents for pricing of GM seed and thus adoption decisions by farmers. The second considers the implications of patents for the diffusion of GM seeds. Smith's research will contribute new work at the intersection of these themes. Smith will consider farmers' adoption decisions in an environment where profits are a function of the payoffs from using GM seed or traditional seed, diffusion of the GM technology, effort of monitoring by the seed companies for patent violation, and cost of patent infringement. In the model, these features influence the decisions to adopt traditional non-GM seed, adopt GM seed legally, or adopt GM seed illegally. Smith's research will contribute a distinctive methodology. The research will apply an evolutionary game theoretic approach to analyze the economic decisions of farmers to adopt GM vs. non-GM seed. This methodology is familiar to evolutionary biologists who use it to analyze the evolution of traits over time based on the benefits they provide. Smith will use the replicator equation to analyze the dynamics of farmers' adoption decisions across time where the benefits are profits. There are no other studies of this topic that use this methodology.2. Supply-side determinants of international trade in crops that are intensive in genetically modified organisms (GMOs). The goal is to quantify the supply-side determinants of trade in industries dominated by GMOs. The research will focus on soybeans, maize, and cotton as these industries have the largest shares of global area planted in GMOs. First, Smith will examine the determinants of comparative advantage by applying the Heckscher-Ohlin (HO) model which predicts comparative advantage based on country differences in endowments. Second, Smith will adapt the model by decomposing country land endowments into GMO and traditional components. This adaptation will allow Smith to examine the effect of an increase in a country's allocation of land to GMOs on comparative advantage. Third, Smith will examine how the determinants of trade have changed over time in the wake of GMO adoption globally. Smith will compare trade prior to the advent of GMOs (1995) and 15 years following (2010). Smith will use cross-section data to examine points in time, and panel data to examine deviations in effects across time. This econometric approach allows for assessment of whether the sources of comparative advantage have changed over time, and whether the reallocation of land to GMOs has contributed to changes. Fourth, Smith will examine the trade effects of country differences in policies toward approval process, risk assessment, labeling policies, traceability requirements, coexistence guidelines, and international treaties. Smith will also consider the trade-effects of policy portfolios by examining alternative weighting of policies. There are currently no such studies in the literature.3. Effects of intellectual property rights (IPRs) on the economic growth of countries. This research will examine the effects of IPRs on the economic growth of countries. The growth literature shows that the net effect of IPRs on growth is ambiguous because it depends on the relative importance of the channels that link IPRs with growth. Thus, Smith's first goal is to empirically examine the direction of the net effects of IPRs. Second, East Asia (EA) provides a unique case for considering IPRs and growth because of the regions strong capacity for imitation combined with weak institutions for protecting intellectual property. Thus, Smith's second goal is to examine the growth effects of IPRs in EA relative to the rest of the world. Third, the 1995 TRIPs Agreement of the WTO brought about a major strengthening of IPRs globally. Proponents (industrialized countries) argued that strengthening IPRs would have positive growth effects. However, developing countries raised concerns that the negative effects of strong IPRs could outweigh the benefits. Thus, Smith's third goal is to determine whether TRIPs altered the growth effects of IPRs. Fourth, the incentives for adopting strong IPRs vary considerably across countries at different development levels. Existing research suggests that less developed countries benefit from weak IPRs, while industrialized countries benefit from strong IPRs. Smith's fourth goal is to determine whether there is a development threshold that alters the growth effects of IPRs. The theoretical method involves adapting a macro growth model to distinguishes capital as physical, human, and intellectual. The empirical method includes estimating specifications using panel data across countries for 1980-2010. Econometric techniques include threshold regression methods.4. Extent to which country policies toward genetically modified organisms are "trade related." This research will examine the extent to which the GMO policies of countries are "trade-related." The research will focus on trade in soybeans and maize (which are the industries with the largest shares of GMO content globally), and on Latin America (which is at the forefront of the developing world in grappling with trade aspects of GMO policies). The international trade literature on GMOs is in its infancy. Primary modeling approaches include computable general equilibrium, game theory and partial equilibrium models. Empirical trade studies are few. The literature on GMOs in LA is relatively more developed but dominated by descriptive case studies. There are no econometric studies for LA that quantify the effects of GMO policies on bilateral trade. Smith's research will fill this gap. Smith will examine the extent to which GMO policies are trade related. First, Smith will construct measures of "revealed comparative advantage" using the Balassa index and use these measures to assess the comparative advantage of LA countries relative to the region and relative to the world. Smith will then estimate adaptations of the Gravity model to examine the effects of importers GMO policies on the bilateral exports of LA countries in soybeans and maize.5. Welfare effects of national and international policy options that support economic development through international technology transfers. This research will examine the welfare effects of technology transfer policies. The broad goal is to determine the relative effectiveness of policy alternatives in promoting economic development, particularly in the poorest countries of the world. In practical terms, the research will contribute to the process of prioritizing goals. In September of 2015, the United Nations (UN) will select a list of Sustainable Development Goals for the world to meet by 2030. To develop the new agenda, an Open Working Group has convened to identify challenge areas and target goals within each area. To help prioritize the goals, the Copenhagen Consensus Center assembled leading economist to undertake research. The purpose is to identify the goals that yield the largest returns for economic and social development. The methodology involves benefit-cost analysis of the goals under consideration and ranking by effectiveness. Ultimately the goal is to help the UN determine the direction of development aid to countries. Smith will undertake research in the area of international technology transfers. Smith's purpose is to assess current policy proposals and to provide perspectives on policy options. Smith's research will examine the channels for technology transfers, economic conditions that support technology transfers, and policies suited for countries at different development levels.

Progress 07/06/15 to 06/30/20

Outputs
Target Audience:The target audiences include: (1) scholars in the discipline of economics, and the sub-fields of international economics and agricultural economics; (2) policymakers within-country governments and international organizations; and (3) undergraduate and graduate students studying in the areas of international economics, public policy, business, and agricultural and applied economics. Changes/Problems: Nothing Reported What opportunities for training and professional development has the project provided?During the reporting period, the project has provided training and professional development for multiple students including (1) Xiangwen Kong who is in the Ph.D. program in Applied Economics at the University of Minnesota; (2) Sebastian Anti who completed the Ph.D. program in Applied Economics at the University of Minnesota during this reporting period; and (3) Andrew Tilman who finished his undergraduate degree at the University of Minnesota, subsequently earned a Ph.D. in the Department of Ecology and Evolutionary Biology at Princeton University and was recently a Post-Doc in the Department of Biology at the University of Pennsylvania. I have supervised and co-authored with these students in the role of Principal Investigator on each of the respective projects. How have the results been disseminated to communities of interest?The dissemination of outputs to communities of interest corresponds with the submission, revision, and resubmission of three manuscripts to academic journals (including the Journal of World Intellectual Property Rights, The World Economy, and the Review of International Economics) for consideration for publication. What do you plan to do during the next reporting period to accomplish the goals? Nothing Reported

Impacts
What was accomplished under these goals? During this reporting period, I focused my attention on objectives #1, #3, #4. (#1) Implications of patents for farmers' decisions to use genetically modified (GM) seed vs. traditional non-GM seed. Research related to objective #1 includes a manuscript entitled "Patents for self-replicating technologies: Game-theoretic analysis of genetically modified seed." During the reporting period, I received a revise and resubmit request from the Journal of World Intellectual Property Rights. I completed the revisions, resubmitted the research, and received an acceptance for forthcoming publication. (#3) Effects of intellectual property rights (IPRs) on the economic growth of countries. During the reporting period, I worked on a new paper entitled "Intellectual property rights and economic development: An application of the synthetic control method." This work focused on learning a novel methodology and applying this method to select developing countries. (#4) Extent to which country policies toward genetically modified organisms are trade-related. Research related to objective #4 includes the manuscript entitled "Intellectual Property Rights and Trade: The Exceptional Case of GMOs." During the reporting period, I undertook a substantial revision of the manuscript based on comments from referees and then submitted it to the Journal of World Intellectual Property Rights.

Publications

• Type: Journal Articles Status: Accepted Year Published: 2020 Citation: Smith, Pamela, and Andrew R. Tilman. 2020 (forthcoming). Patents for self-replicating technologies: Game theoretic analysis of genetically modified seed. Journal of World Intellectual Property Rights.

Progress 10/01/18 to 09/30/19

Outputs
Target Audience:The target audiences include: (1) scholars in the discipline of economics, and the sub-fields of international economics and agricultural economics; (2) policy makers within country governments and international organizations; and (3) undergraduate and graduate students studying in the areas of international economics, public policy, business, and agricultural and applied economics. Changes/Problems: Nothing Reported What opportunities for training and professional development has the project provided?During the reporting period, the project has provided training and professional development for multiple students including: (1) Jooyoung Yang who completed her Ph.D. in Applied Economics at the University of Minnesota, and is now an Associate Research Fellow for the Korean Institute for Industial Economics and Trade in South Korea; and (2) Xiangwen Kong who is in her second year in the Ph.D. program in Applied Economics at the University of Minnesota; (3) Sebastian Anti who is in his fourth year in the Ph.D. program in Applied Economics at the University of Minnesota; and (4) Andrew Tilman who finished his undergraduate degree at the University of Minnesota, subsequently earned a Ph.D. in the Department of Ecology and Evolutionary Biology at Princeton University, and is now a Post-Doc in the Department of Biology at the University of Pennsylvania. I have supervised and co-authored with these students in the role of Principle Investigator on each of the respective projects. How have the results been disseminated to communities of interest?The dissemination of outputs to communities of interest corresponds with the submission of three manuscript to academic journals (including the Journal of World Intellectual Property Rights, The World Economy, and the Review of International Economics) for consideration for publication. What do you plan to do during the next reporting period to accomplish the goals?I currently have multiple research projects in progress that correspond with the five goals detailed elsewhere in this report. During the next reporting period, I plan to further develop this work and to submit, revise, and/or resubmit the individual papers for the purpose of publication and dissemination of results.

Impacts
What was accomplished under these goals? This report covers the period from October 1, 2018 to September 30, 2019. During this period, I focused my attention on objectives #1, #3, #4 and #5. (#1) Implications of patents for farmers' decisions to use genetically modified (GM) seed vs. traditional non-GM seed. Research related to objective #1 includes a manuscript entitled "Patents for self-replicating technologies: Game theoretic analysis of genetically modified seed." During the reporting period, I revised the manuscript based on comments from referees and then submitted it to the Journal of World Intellectual Property Rights. (#3) Effects of intellectual property rights (IPRs) on the economic growth of countries. Research related to objective #3 includes the manuscript entitled "What are the effects of intellectual property rights on economics growth? Empirical analysis of East Asia, TRIPs, and development." During the reporting period, I revised the manuscript based on comments from referees and then submitted it to the The World Economy. (#3) Effects of intellectual property rights (IPRs) on the economic growth of countries. During the reporting period, I began work on a new paper entitled "Intellectual property rights and economic development: An application of the synthetic control method." This work focused on developing the research focus and methodology. (#4) Extent to which country policies toward genetically modified organisms are trade related. Research related to objective #4 includes the manuscript entitled "How do intellectual property rights affect U.S. transfers of GMO technologies through trade?" During the reporting period, I revised the manuscript based on comments from referees and then submitted it to the Review of International Economics.

Publications

Progress 10/01/17 to 09/30/18

Outputs
Target Audience:The target audiences include: (1) scholars in the discipline of economics, and the sub-fields of international economics and agricultural economics; (2) policymakers within country governments and international organizations; and (3) undergraduate and graduate students studying in the areas of international economics, public policy, business, and agricultural and applied economics. Changes/Problems: Nothing Reported What opportunities for training and professional development has the project provided?During the reporting period, the project has provided training and professional development for multiple students including: (1) four students who have completed their Ph.D. degrees from the Department of Applied Economics at the University of Minnesota (Jooyoung Yang, Bolormaa Jamiyaansuren, Jaeseok Lee, Akinori Kitsuki); and (2) one student who is in her second year in the Ph.D. program in Applied Economics (Xiangwen Kong). I have supervised and co-authored with these students in the role of Principle Investigator on each of the respective projects. How have the results been disseminated to communities of interest?The dissemination of outputs to communities of interest corresponds with the publications noted elsewhere in this report, including the World Trade Review, a publication of the World Trade Organization. What do you plan to do during the next reporting period to accomplish the goals?I currently have multiple research projects in progress that correspond with the five goals detailed elsewhere in this report. During the next reporting period, I plan to further develop this work and to submit, revise, and/or resubmit the individual papers for the purpose of publication and dissemination of results.

Impacts
What was accomplished under these goals? This report covers the period from October 1, 2017, to September 30, 2018. During this period, I focused my attention on objectives #2, #4 and #5. (#2) Research related to objective #2 includes the manuscript entitled "Determinants of comparative advantage in GMO-intensive industries." During the reporting period, this article was published in the World Trade Review, a prominent journal for research on international trade and policy. The final journal version was released in July 2018. (#4 and #5) Research related to objectives #4 and #5 includes a new manuscript entitled "How do foreign intellectual property rights affect U.S. transfers of GMO technologies through trade?" During the reporting period, I pursued the model development, empirical analysis, and writing. I then submitted a first version of the manuscript to the Journal of International Economics, the premier journal in my field.

Publications

• Type: Journal Articles Status: Published Year Published: 2018 Citation: Smith, Pamela J., Bolormaa Jamiyansuren, Akinori Kitsuki, Jooyoung Yang and Jaeseok Lee. 2018. Determinants of comparative advantage in GMO-intensive industries. World Trade Review 17 (3): 427-449.

Progress 10/01/16 to 09/30/17

Outputs
Target Audience:The target audiences include: (1) scholars in the discipline of economics, and the sub-fields of international economics and agricultural economics; (2) policy makers within country governments and international organizations; and (3) undergraduate and graduate students studying in the areas of international economics, public policy, business, and agricultural and applied economics. Changes/Problems: Nothing Reported What opportunities for training and professional development has the project provided?During the reporting period, the project has provided training and professional development for multiple students including: (1) four students who have recently completed their Ph.D. degrees from the Department of Applied Economics at the University of Minnesota (Jooyoung Yang, Bolormaa Jamiyaansuren, Jaeseok Lee, Akinori Kitsuki); and (2) a Fulbright Research Fellow at the Universidad Estadual de Campinas in Brazil (Erik Katovich) who is now enrolled in a Ph.D. program at the University of Wisconsin, Madison. I have supervised and co-authored with these students in the role of Principle Investigator on each of the respective projects. How have the results been disseminated to communities of interest?The dissemination of outputs to communities of interest corresponds with the publications noted elsewhere in this report, including the World Trade Review and Applied Economic Perspectives and Policy. What do you plan to do during the next reporting period to accomplish the goals?I currently have multiple research projects in process that correspond with the five goals detailed elsewhere in this report. During the next reporting period, I plan to further develop this work and to submit, revise, and/or resubmit the individual papers for the purpose of publication and dissemination of results.

Impacts
What was accomplished under these goals? This report covers the period from October 1, 2016 to September 30, 2017. During this period, I focused my attention on objectives #2 and 4. (#2) Research related to objective #2 includes the manuscript entitled "Determinants of comparative advantage in GMO-intensive industries." During the reporting period, I revised the manuscript in response to requests for revisions from the World Trade Review, a prominent journal for research on international trade and policy. This journal subsequently accepted the paper in May 2017 and an electronic version of the paper was published on July 20, 2017. (#4) Research related to objective #4 includes a manuscript entitled "Are GMO policies trade-related? Empirical analysis of Latin America." During the reporting period, I revised the manuscript for publication in the journal Applied Economic Perspectives and Policy. The journal published the paper electronically on November 3, 2016 and in journal form on June 1, 2017. For these two objectives, the revisions included work on the conceptual models, econometrics, and manuscript writing and editing.

Publications

• Type: Journal Articles Status: Published Year Published: 2016 Citation: Smith, Pamela J., and Erik S. Katovich. 2017. Are GMO policies trade related?: Empirical analysis of Latin America. Applied Economic Perspectives and Policy 39 (2): 286-312. (Electronic version released and copyrighted 11/3/16).
• Type: Journal Articles Status: Published Year Published: 2017 Citation: Smith, Pamela J., Bolormaa Jamiyansuren, Akinori Kitsuki, Jooyoung Yang, and Jaeseok Lee. 2017. Determinants of comparative advantage in GMO-intensive industries. World Trade Review, 1-23. Doi:10.1017/S1474745617000180

Progress 10/01/15 to 09/30/16

Outputs
Target Audience:The target audiences include: (1) scholars in the discipline of economics, and the sub-fields of international economics and agricultural economics; (2) policy makers within country governments and international organizations; and (3) undergraduate and graduate students studying in the areas of international economics, public policy, business, and agricultural and applied economics. Changes/Problems: Nothing Reported What opportunities for training and professional development has the project provided?During the reporting period, the project has provided training and professional development for multiple students including: (1) four Ph.d. students in the Department of Applied Economics at the University of Minnesota (Jooyoung Yang, Bolormaa Jamiyaansuren, Jaeseok Lee, Akinori Kitsuki); (2) a Ph.d. student in the Department of Ecology and Evolutionary Biology at Princeton University (Andrew Tilman); and (3) a Fulbright Research Fellow at the Universidad Estadual de Campinas in Brazil (Erik Katovich). I have supervised and co-authored with these students in the role of Principle Investigator on each of the respective projects. How have the results been disseminated to communities of interest?The dissemination of outputs to communities of interest corresponds with the publications and other outputs noted elsewhere in this report. The four outputs produced in collaboration with the Copenhagen Consensus Center were designed to inform the policy dialog of the United Nations in developing their Sustainable Development Goals for 2015-2030. The research outputs have been disseminated in multiple ways. The research is available for download from the website of The Copenhagen Consensus. The research has been reviewed by an Expert Panel (including three Nobel Laureates) who have used the research to make recommendations to the United Nations on policy priorities for economic development. The research has been featured in prominent media outlets (e.g., Wall Street Journal, Time.com, Reuters, The Guardian, The Telegraph) through published articles and editorials in both the developed and developing worlds. The research has been summarized in Foreign Affairs and featured on the radio podcasts (e.g., Freakanomics). Most importantly, the research has been disseminated to 500+ UN ambassadors, staffers and decision makers within the development community who are responsible for making decisions regarding aid to developing countries. Finally, the remaining output published by John Wiley & Sons, Inc. has been made accessible internationally for use by instructors of courses on trade and policy. What do you plan to do during the next reporting period to accomplish the goals?I currently have multiple research projects in process that correspond with the five goals detailed elsewhere in this report. During the next reporting period, I plan to further develop this work and to submit, revise, and/or resubmit the individual papers for the purpose of publication and dissemination of results.

Impacts
What was accomplished under these goals? This report covers the period from October 1, 2015 to September 30, 2016. During this period, I focused my attention on objectives #1, 2 and 4. (#1) Research related to objective #1 includes a manuscript entitled "Patents for self-replicating technologies: Game theoretic analysis of genetically modified seed." During the reporting period, I submitted the paper (sequentially) to two top general economics journals and made revisions to the research in response to comments from referees. (#2) Research related to objective #2 includes the manuscript entitled "Determinants of comparative advantage in GMO-intensive industries." During the reporting period, I revised the manuscript in response to comments from referees during two rounds of "revise and resubmit" requests from a prominent international economics journal. (#4) Research related to objective #4 includes a manuscript entitled "Are GMO policies trade-related? Empirical analysis of Latin America." During the reporting period, I revised the manuscript based on a second request to "revise and resubmit" from a high quality applied economics journal. The paper was accepted in August of 2016 for forthcoming publication. For these three objectives, the revisions included new work on the conceptual frameworks (models), new econometric (statistical) work, and manuscript editing.

Publications

• Type: Other Status: Published Year Published: 2015 Citation: Smith, Pamela J. 2015. Post-2015 Consensus: Science and technology perspective. In Post-2015 Consensus summary of academic research. Copenhagen, Denmark: Copenhagen Consensus Center. http://www.copenhagenconsensus.com/publication/post-2015-consensus-science-and-technology-perspective-smith.
• Type: Other Status: Published Year Published: 2015 Citation: Smith, Pamela J. 2015. Instructor's lecture notes for global trade policy: Questions and answers. John Wiley & Sons, Inc. http://www.wiley.com/go/globaltradepolicy.

Progress 07/06/15 to 09/30/15

Outputs
Target Audience:The target audiences include: (1) scholars in the discipline of economics, and the sub-fields of international economics and agricultural economics; (2) policy makers within country governments and international organizations including the United Nations; and (3) undergraduate and graduate students studying in the areas of international economics, public policy, business, and agricultural and applied economics. Changes/Problems: Nothing Reported What opportunities for training and professional development has the project provided?The project that I worked on during this reporting period is a collaboration with several Ph.D. students in the Department of Applied Economics at the University of Minnesota (including Bolormaa Jamiyansuren, Jooyoung Yang, Akinori Kitsuki, and Jaeseok Lee). As Principle Investigator on the project, I supervised the training of these students. How have the results been disseminated to communities of interest? Nothing Reported What do you plan to do during the next reporting period to accomplish the goals?I currently have several research papers in progress. During the next reporting period, I plan to revise and submit/resubmit these for the purpose of publication and dissemination.

Impacts
What was accomplished under these goals? This report covers the three month period from July 6, 2015 to September 30, 2015. During that period, I focused my attention on objective #2 entitled: "Supply-side determinant of international trade in crops that are intensive in genetically modified organisms." In the spring of 2015, I submitted a manuscript on this subject to an economics journal for review for potential publication. I subsequently received comments/suggestions for revision. During the reporting period noted above, I undertook the new econometric work (which focused on robustness testing) and began revising the writing of the manuscript.

Publications