Genetically modified crops, factor endowments, biased technological change, wages and poverty reduction

Abstract

Genetically Modified (GM), Herbicide Tolerant (HT) white maize, developed in the USA to save labour, is being grown by smallholders in KwaZulu Natal, South Africa. This paper uses panel data for Africa, Asia and Latin America to investigate the effects of factor endowments and biased technological change on productivity growth, labour incomes and poverty reduction. Preliminary results show that lack of population pressure on the land slows yield growth, which itself largely explains labour productivity growth in agriculture. Labour productivity growth is the key determinant of wages, growth in GDP per capita and poverty reduction. Africa seems to have fared poorly in poverty reduction because many countries have abundant poor quality land. There has been yield growth, but it has not led to growth in labour productivity, as it did during the Asian green revolution. Thus, a GM technology that raises labour productivity could be beneficial, so long as employment is maintained.