Potential economic impacts of terminator technologies: policy implications for developing countries

The terminator gene can render seeds sterile, so forcing farmers to purchase fresh seed every year. It is a technological solution to the problem of market failure that could increase the appropriability of R&D investment more effectively than intellectual property rights legislation or patents. This paper shows that appropriability should be more than tripled and that this leads to greater private R&D investment, which may be expected to double or triple. This would bring open-pollinating varieties into line with F1 hybrids, for which seed cannot be saved. In turn, the increased investment should raise yield increases to levels similar to those for hybrid crops. Thus, there are benefits to set against the possible ecological and environmental costs and the clear distributional and social consequences. The paper discusses the way the seed market is developing, the possible impacts, especially from a developing country viewpoint, and considers the policy changes that are needed.