Infringement of Intellectual Property Rights: Causes and Consequences

A game-theoretic model of heterogeneous producers is developed to examine the economic causes and consequences of intellectual property right (IPR) infringement in the context of a small open developing economy. Analytical results show that complete deterrence of IPR infringement is not always economically optimal. IPR infringement affects economic welfare and has important ramifications for the pricing and adoption of the new technology (biotechnology). The quantitative nature of results depends on the labeling regime. If the TRIPs agreement follows the custom of retaliatory sanctions under GATT, IPR enforcement will remain imperfect and innovators' ability to obtain value for their biotech traits will be limited.     

Determinants of farmers' indigenous soil and water conservation investments in semi-arid India

This paper investigates the determinants of farmers' indigenous soil and water conservation investments in the semi-arid tropics of India. A simple theoretical model is used to develop hypotheses about the determinants of investment under alternative factor market conditions, and these are tested using data on conservation investment from three villages. We find that conservation investment is significantly lower on leased land in two of the study villages and lower on plots that are subject to sales restrictions in one village, suggesting the potential for land market reforms to increase conservation investment. In one village, households with more adult males, more farm servants, and less land invest more in conservation, as predicted by Ihe model of imperfect labor markets; and households with more debt and off - farm income invest more, consistent with the model of imperfect credit markets. Evidence that conservation investment is affected by factor market imperfections is weaker in the other villages, where investments are much larger, suggesting transaction costs as the source of the differences between villages. Other factors that have a significant effect on investment include the farmer's education and caste, characteristics of the plot (size, slope, irrigation status, and quality ranking) and the presence of existing land investments. The results suggest the importance of accounting for differences across communities and households in factor market and agroelimatic conditions in designing programs to promote investments in soil and water conservation.     

The influence of proximity to market on bean producer prices in Nicaragua

Transport costs are an important determinant of smallholder welfare in developing countries. In particular, transport costs influence the prices that smallholders receive for their produce. We propose a simple way of quantifying this influence. Taking the example of bean producers in Nicaragua, we employ a hedonic price model to estimate the effects of a smallholder's proximity to markets on the prices that he/she receives, while controlling for other factors such as the volume and quality of beans sold. We find that on average each additional minute of travel time reduces farm gate prices by 2.5 cents per quintal. Based on these results, the annual income from bean sales of the average smallholder in our sample would increase by between 24 and 110 USD if travel time to markets were reduced by 25%. Estimates of this nature can make an important contribution to cost–benefit assessments of infrastructure investments.     

A trait-based model of the potential demand for a genetically engineered food crop in a developing economy

We predict the potential demand of smallholder farmers for genetically transformed varieties of a food crop, the cooking banana of the East African highlands. Farmer demand for planting material is derived in an agricultural household model that accounts for variety traits and missing markets. The demand for candidate host varieties is predicted using a Zero‐Inflated Poisson (ZIP) regression system. The fitted model is used to illustrate the sensitivity of farmer demand for improved planting material to (a) investments in research and development, represented by the effectiveness of gene insertion and expression, and (b) other public investments in education, extension, and market infrastructure that support diffusion. By comparing the characteristics of agricultural households we demonstrate that the choice of host variety can have social consequences, favoring one rural population compared with another. Clients for transgenic banana planting material are likely to be poorer, subsistence‐oriented farmers in areas greatly affected by biotic constraints. A model of this type might be useful in assessing the investments needed to support the systematic dissemination of improved planting material. The approach can be generalized to other crop biotechnologies for smallholder farming systems, particularly in developing economies.     

Effects of subsidized crop insurance on crop choices

This study focuses on how subsidized crop insurance affects crop choices. Crop insurance may change farm investments by reducing risks and providing subsidies. First, actuarially fair insurance reduces risks in crop production and marketing, holding the expected return constant. Second, insurance subsidies encourage farms to purchase crop insurance, which increases the expected return to insured risky crops. Farms also have many self‐insurance mechanisms such as crop diversification or working off the farm. We derive conditions under which (1) unsubsidized and actuarially fair crop insurance or (2) insurance premium subsidies lead to more investment in a risky higher return crop. We then examine the role of self‐insurance for these conditions. The impact of premium subsidies is decomposed into a direct profit effect and an indirect coverage effect. These effects are explained by substitutions between market insurance and self‐insurance and between a risky crop and a safe crop. We discuss each effect as a combination of subsidy and risk effects. Numerical illustrations show that an insurance subsidy has a larger impact on risky crop investments compared to that of an input subsidy when farms are more risk‐averse and have high costs of self‐insurance. The framework provides a novel way to evaluate subsidized crop insurance programs.     

The Impact of Seed Policy Reforms and Intellectual Property Rights on Crop Productivity in India

The growth of private investment in developing‐country agriculture, new advances in the biological sciences, and rapid integration of developing countries into the global trading system has heightened interest in the topic of seed market and intellectual property rights’ (IPRs) policies among public policy‐makers, corporate decision‐makers and other actors in the agricultural sector. But there are still unanswered questions about whether emerging and evolving seed policy reforms and IPR regimes in developing countries will contribute to increasing crop productivity and improving food security. This paper attempts to answer some of these questions by focusing specifically on the case of India, the regional leader in implementing seed policy reforms and IPRs in agriculture. Findings indicate that maize and pearl millet yields grew significantly during the last two decades due partly to the combination of (1) public policies that encouraged private investment in India’s seed industry during the 1980s, and (2) biological IPRs conferred by hybridisation that conveniently married the private sector’s need for appropriability with the nation’s need for productivity growth. Although past lessons are not an indication of future success, this convergence of policy solutions and technology opportunities can be replicated for other crops that are vital to India’s food security.     

Price premiums,payment delays,and default risk: understanding developing country farmers’ decisions to market through a cooperative or a private trader

Smallholder farmers in developing countries face a competitive disadvantage in modern agricultural supply chains. Joint marketing through cooperatives is a potential tool to mitigate these disadvantages; yet cooperatives’ success in these settings is uneven at best. We develop an analytical model to study a farmer's choice of selling to a private trader who pays cash on delivery but may exercise market power or a cooperative that promises a price premium but delays payment and carries a concomitant risk of default. In the presence of impatient and risk‐averse farmers, we show that these factors can severely limit smallholder patronage of a cooperative, despite a promised price premium. We then construct and parameterize a simulation model to fit a profile of heterogeneous farmers within a prototype developing‐country village, and study the optimal decisions of farmers regarding marketing through a cooperative versus a private trader. Results suggest that modest improvements in either timeliness of payment or probability of default can induce a substantial increase in a cooperative's market share and economic viability. Extending the simulation analysis to a dynamic setting shows how implementing reasonable policies to improve a cooperative's payment timeliness and default probability can markedly improve its growth trajectory.     

Will the TRIPS Agreement Foster Appropriate Biotechnologies for Developing Countries?

While almost all of the investment in agricultural biotechnology to date has been in temperate crops suitable for developed countries, developing countries are the greatest potential beneficiaries of this major technological advance. To realise this potential requires investment in crops appropriate to climatic and agronomic conditions in developing countries. Protection of intellectual property rights is a necessary condition for the private sector to invest in appropriate biotechnologies. This paper develops a game theoretic model of a bioscience firm that adapts a new technology to a range of agronomic conditions in response to the enforcement of intellectual property rights in a developed and a developing country. Over a range of potential penalties, low levels of enforcement by the developing country remain endemic despite the desire to have the bioscience firm adapt the biotechnology to its local conditions. In particular, the trade penalties contained in the Agreement on Trade‐Related Aspects of Intellectual Property Rights are likely to be ineffective. The developing country might increase enforcement if the developed country was more aggressive in liberalising agriculture trade because there would be greater symmetry in the benefits of the technology.     

Assessing the effectiveness of rural credit policy on the adoption of integrated crop-livestock systems in Brazil

This study analyzes the effectiveness of rural credit policy to increase the adoption of ICLS. Analyzes are based on a survey with 175 farmers in the State of São Paulo, Brazil. Our estimates suggest that rural credit has positive and relevant impacts on the adoption of ICLS. In turn, the adoption of these systems may also involve investments in fixed capital and increases in operational costs, which create additional demand for rural credit. Other factors, such as access to extension policy, production scale, ex-ante perceptions, and market infrastructure also explain ICLS adoption. The access to rural credit policy is also determined by dependence on farm income, farmer’s perception of transaction costs, and supply of credit in the municipality. The study finally discusses important implications for the devising of rural credit policies and the diffusion of sustainable production systems in developing countries.     

Intellectual property piracy in a North–South context: empirical evidence

The protection of intellectual property rights (IPR) has been a contentious issue for more than 20 years. Industrialized nations have moved to knowledge‐based economies, and simultaneously, trade barriers have fallen, making intellectual property (IP) vulnerable. Adding to this vulnerability are conflicting international institutional environments, belief systems, and economic realities. The debate over IPR protection has become a significant global trade issue pitting the net‐technology producing “North” against the net‐technology consuming “South.” With this in mind, there has been much debate about the impact of alternative IPR regimes (tight or loose) on the welfare of Southern economies. Policy makers, in both the South and the North, search for arguments to convince recalcitrant Southern countries to follow the Northern model of strict IPR regimes. The South, faced with a dilemma, searches for arguments to justify looser regimes or convince its populace that tighter regimes are in the best interest of the nation. The objective of this research is to add empirical clarity about the welfare impacts of weak IPR on the firm and host country. To this end, we employ a novel methodological design and unique context. The research design is deductive, in that we use the empirical setting of Pioneer‐Argentina, S.A., a seller of bioengineered agricultural seeds, to test the existing theory of weak IPR impacts in a North–South context.     

Participation in contract farming and farm performance: Insights from cashew farmers in Ghana

The global demand for cashew nuts continues to increase steadily. However, many African countries face difficulties in marketing and adding value to the product. Using recent survey data of 391 cashew farmers in Ghana, this paper contributes to the growing evidence on the significance of contract farming (CF) in improving the welfare of rural households in developing countries. Specifically, the paper analyzes the factors that influence cashew farmers’ decisions to participate in CF, and the impact of participation on farmers’ performance. We employ a recently developed switching regression model with endogenous explanatory variables and endogenous switching to control for selection bias caused by observable and unobservable factors. The empirical results show that participation in CF significantly increases labor productivity and price margins, as well as cashew yields, and net revenues. A disaggregated analysis of the sample into farm size categories reveals that small‐sized cashew farms tend to benefit more through CF, compared to medium‐ and large‐sized farms.     

Protecting Biotechnology IPRs in Developing Countries: Simple Analytics of a Levy Solution

High transaction costs and an absence of institutional infrastructure in developing countries prevent comprehensive enforcement of intellectual property rights and generate obstacles to the adoption of genetically modified (GM) crop technology. Governments of developing countries that are members of the World Trade Organization are faced with two options when licensing GM crop technology: (1) attempt to regulate GM crops to the standards of the Agreement on Trade‐Related Aspects of Intellectual Property (TRIPS) or (2) allow a black market in GM seeds and risk trade retaliation from the GM innovator's host country through a TRIPS trade complaint. This paper develops a conceptual model that frames the adopting country's range of licensing options, including a new levy system, and derives welfare measures for each option. The model illustrates how a levy on GM technology can be a welfare‐increasing policy for developing countries, and the operation of a levy is discussed. The conceptual model is applied to Brazil's soybean market and quantitative economic surplus measures are estimated within a calibrated welfare model for a range of licensing scenarios. The model's results suggest that a levy may interfere with the long‐term prospects for innovators to collect monopoly rents in adopting countries.     

On the Adoption of Genetically Modified Seeds in Developing Countries and the Optimal Types of Government Intervention

Given the proprietary nature of most genetically modified (GM) seed technologies, the question arises as to how farmers in developing countries can gain proper access. Based on empirical observations, a theoretical model is developed, focusing on farmers' adoption decisions in response to pricing strategies of a foreign monopolist and a domestic supplier of conventional seeds. Government interventions, such as seed subsidies, encouragement of R&D, and intellectual property rights (IPR) enforcement, and their effects on GM coverage and national welfare are analyzed. The possibility of the government obtaining a license to distribute GM seeds domestically through a transfer to the monopolist is also considered.     

Willingness to contract versus opportunity to contract: a case study in Kenya's French bean export market

We characterize systematic differences in willingness and opportunity to contract for farmers in and out of the French bean supply market in Kenya. We find that the factors associated with being a low cost producer do not always align with the factors correlated with opportunity to contract. We also find that farmers in and out of the market differ on average in the premiums they place on buyer reliability, which suggests that imperfect contract enforcement could impact participation in French bean contracting.     

Will digital technologies transform agriculture in developing countries?

Mobile phones and the internet have significantly affected practically all sectors of the economy and agriculture is no exception. Building on a recent World Bank flagship report, this article introduces a concise framework for describing the main benefits from new information and communication technologies. They promote greater inclusion in the broader economy, raise efficiency by complementing other production factors, and foster innovation by dramatically reducing transaction costs. The article reviews the recent literature on corresponding technology impacts in the rural sector in developing countries. Digital technologies overcome information problems that hinder market access for many small‐scale farmers, increase knowledge through new ways of providing extension services, and they provide novel ways for improving agricultural supply chain management. While there are many promising examples of positive impacts on rural livelihoods—or “digital dividends”—these have often not scaled up to the extent expected. The main reason is that technology can always only address some, but not all of the barriers faced by farmers in poorer countries.     

Evolution of the Amazonian frontier: Land values in Rondônia, Brazil

Patterns in property values provide strong signals about the future and sustainability of land use. This paper analyzes the determinants of land value in an Amazonian frontier settlement. We estimate hedonic price functions to identify factors that affect the value of farm properties in the western Brazilian Amazon. Distance to market explains nearly one-third of the variation in farm value, as predicted by the von Thünen model. After controlling for location relative to the central market and for municipality, we find that investment in the farms (as reflected in the stocking rate of pastures and the establishment of home gardens) has the next largest impact on land value. The value per hectare of land is negatively related to total lot size, suggesting that any economies of scale are outweighed by the cost of accessing remote corners of large properties. We do not find that land values are related to available measures of biophysical factors or to historic or current land use. Our results do not identify any premium for forest cover or for land uses considered to be more sustainable than pasture on the property itself. However, farm values are affected by neighboring land cover, specifically, the extent of barren land. Thus, local knowledge of factors contributing to future productivity, as summarized in land values, confirms that soil exhaustion can lead to a general decline in property values, while investments in a property both as a homestead and as a farm can help sustain frontier settlements.     

Credit market access and profitability in Tunisian agriculture

This work develops an econometric model that links credit access with agricultural profitability and investment. Using data collected from rural Tunisia, this work provides direct estimates of credit access and its effects. Econometric estimates are run for agricultural investment and profitability as a function of credit access. The investigation of credit access and its effect suggests that the presence of credit market constraints does impinge significantly on farm profitability, but not on investments.     

The fourth industrial revolution,agricultural and rural innovation,and implications for public policy and investments: a case of India

The Indian Government and public–private partnerships are developing and disseminating a dizzying number of innovative, networked solutions, broadly known as the Digital India initiative, to increase the efficiency of safety nets and worker productivity and to improve life. Yet, challenges to turn the power of information and other technologies into a farmer‐friendly technological revolution for India's 156 million rural households are considerable, including: (1) reliable, up‐to‐date, location‐specific message content for a diverse agriculture to help stratified households shift to productive, knowledge‐intensive agriculture as a business—government, private sector, and civil society have big roles to play; (2) digital literacy, i.e., teaching farmers how to choose and use apps, even where the digital divide is absent; apps are, or soon to be, in regional languages; and (3) monitoring actual use and impacts on users’ lives by understanding the adoption and adaptation processes. These challenges call for bottom‐up, complementary investments in physical, human, and institutional capital, and farmer‐friendly e‐platforms, while forging ahead with many top‐down policy and institutional reforms currently underway, in which progress is real and constraints holding back greater success are better understood.     

Population growth,agricultural intensification,induced innovation and natural resource sustainability: An application of neoclassical growth theory

Using a simple neoclassical type growth model including both man-made and natural capital as inputs to production, the theoretical basis for a U-shaped relationship between agricultural intensification and farm household investment in renewable resource capital is established. As development of technology, infrastructure, or markets increase the relative return to investment in man-made capital over natural capital, resource depletion occurs as man-made capital is substituted for lower return natural capital. Once returns are equalized, both man-made and natural capital are accumulated. If labor and these forms of capital are complementary, the output effects outweigh the substitution effects in the long run, leading to net accumulation of natural as well as man-made capital as a result of such technological or market development. Population growth also induces investment in both man-made and natural resource capital in the long run by increasing their marginal products. However, population growth causes declining per capita levels of both natural and man-made capital and production per capita in the long run, if technology is fixed and decreasing returns to scale. The model thus supports the Boserupian argument of induced intensification and resource improvement, as well as the Malthusian argument of the impoverishing effects of population growth. However, population growth may also induce development of infrastructure, markets, and technological or institutional innovation by reducing the fixed costs per capita of these changes, though these developments may not occur automatically. Government policies can play a large role in affecting whether these potential benefits of population growth are realized. In addition, credit policies may reduce resource degradation caused by substitution of man-made for natural capital, by allowing farmers to accumulate man-made capital (such as fertilizers) without depleting their natural capital. Policies to internalize the external environmental costs of using man-made capital will reduce both types of capital and production, indicating a clear trade-off between addressing environmental concerns on the one hand and reducing poverty and promoting resource conservation investments on the other. By contrast, internalizing the external benefits of investments in resources increases wealth and production per capita in the long run. The ‘intertemporal externality’ due to a higher private than social rate of time preference does not justify interventions to promote investments in resource capital; rather it argues for the promotion of savings and investment in general.