Seeds of Change : The Effects of the Introduction of Bt Cotton in India

Overview & Synopsis

Although many studies have examined the factors affecting structural transformation, the role of relative factor endowments has not been extensively explored. This paper examines the effects of the introduction of Bt cotton in India and finds substantial increases in cotton output and the land allocated to growing it. The effects diminish as the ratio of labor-to-land increases. This suggests that when inputs are complementary and technological change is labor augmenting, the relative scarcity of other inputs can limit productivity gains, shaping patterns of structural transformation. Despite increases in cotton land and output, the share of workers in agriculture remained unchanged.