Working Paper
Biotechnology and Poverty Reduction in Developing Countries

Throughout human history, technology has proven its ability to contribute to higher material living standards, yet the work of poverty alleviation is far from complete. We believe that in the modern age, biotechnology holds remarkable potential for reducing poverty and its attendant adversities. However, the extent to which this promise is fulfilled will depend as much on institutions as it does on innovation. In these early stages of development, biotechnology is concentrated in the most developed, Tier I countries. In this paper, we envision future biotechnology diffusion around the world, with large emergent Tier II economies playing a catalytic role in propagating affordable and appropriate innovation products. Through the mechanism of a globally R&D supply chain, such products can ultimately reach the world’s poorest and improve their dietary, health, and income status. For this to happen, three general conditions must be satisfied. First, property rights must be clearly delineated and recognized by more universal standards. Second, multilateral public and private initiative must be taken to lower barriers to diffusion. These include government intervention, imperfect contractual standards, and incomplete information. A broad spectrum of government policies—from outright protectionism to corruption—impedes the propagation of innovation between countries of all three Tiers. Incompatibility and incompleteness of legal systems are also major obstacles to international sharing of innovation. Finally, informational commons supported by institutions like the IPR clearinghouse are needed to facilitate innovation partnership. We present a general vision of R&D networks extending from the capital and technology rich Tier I, through the dynamic Tier II emerging economies, to those, finally, in Tier III who most need enhanced agricultural and human productivity. We believe that achieving this goal is not only desirable, but imperative to global sustainable development. If the poor are to enjoy the full benefits of agricultural biotechnology, its productivity gains must be conferred on both rural and urban low income households. The former will benefit directly if biotechnology is appropriate (both in terms of technology and incentives) for penetration into smallholder production systems. By contrast, the latter benefit must be indirect, with lower food prices contributing favourably to real wages of the urban poor. Only dramatic increases in productivity can thus reconcile producer and consumer interests domestically, but biotechnology represents exactly such a promise.