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Bt cotton and production risk: panel data evidence

Crost, Benjamin and Shankar, Bhavani (2008) 'Bt cotton and production risk: panel data evidence.' International Journal of Biotechnology, 10 (2/3). pp. 122-131.

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Abstract

The farm-level success of Bt-cotton in developing countries is well documented. However, the literature has only recently begun to recognise the importance of accounting for the effects of the technology on production risk, in addition to the mean effect estimated by previous studies. The risk effects of the technology are likely very important to smallholder farmers in the developing world due to their risk-aversion. We advance the emergent literature on Bt-cotton and production risk by using panel data methods to control for possible endogeneity of Bt-adoption. We estimate two models, the first a fixed-effects version of the Just and Pope model with additive individual and time effects, and the second a variation of the model in which inputs and variety choice are allowed to affect the variance of the time effect and its correlation with the idiosyncratic error. The models are applied to panel data on smallholder cotton production in India and South Africa. Our results suggest a risk-reducing effect of Bt-cotton in India, but an inconclusive picture in South Africa.

Item Type: Articles
SOAS Departments & Centres: Faculty of Law and Social Sciences > Department of Financial and Management Studies > Centre for Development, Environment and Policy (CeDEP)
ISSN: 09636048
DOI (Digital Object Identifier): 10.1504/IJBT.2008.018349
Depositing User: Bhavani Shankar
Date Deposited: 05 Jan 2012 14:44
URI: http://eprints.soas.ac.uk/id/eprint/12820

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