The Political Economy of Agricultural Biotechnology Policies

Abstract

This article develops a political-economy framework to analyze the formation of agricultural biotechnology policies. Going beyond accounts that largely attribute differences between US and European regulatory environments to consumer attitudes, we consider the impact of what amounts to a Schmpeterian process of "creative destruction" across the entire range of relevant economic sectors and interests. The analysis suggests that in Europe and in some developing countries a "strange bedfellows" constellation of concentrated economic interests (including incumbent agrochemical manufacturers, certain farm groups, and environmental protest activists) act in rational self-interest to negatively characterize GM technology in the public arena and to seek regulations that block or slow its introduction. In contrast, those interests most likely to experience welfare gains from biotechnology are the more diffused and less informed -- including consumers and small farmers. The most profound implications of overregulation of agricultural biotechnology are (1) delays in the global diffusion of proven technologies, resulting in a lower rate of growth in the global food supply and higher food prices, and (2) disincentives for investing in further R&D, resulting in a slowdown in innovation of second generation technologies anticipated to introduce broad consumer and environmental benefits.