Monetary Benefit Sharing Arising From Bioprospecting with Traditional Knowledge Between the North and the South

Abstract

Bioprospecting is a joint venture typically between a corporation in a developed country (the North) and a developing country (the South). The corporation contracts to make substantial advance payments to the source country of the genetic resources and may pay royalties if products with commercial value result from the project. However, there is no agreement over the appropriate rate of monetary benefit sharing between the North and the South. This paper theoretically investigates the issue of benefit sharing in a model where the South receives advance payments and royalties. We consider three cases: the case where the North and the South behave neither as the leader nor as the follower, the case that the South is the leader and the case that the North is the leader. In the first and the third cases ,we show that the profits from the sale of the developed product should be shared between the two countries according to their relative contribution to research and development (R and D), regardless of the usefulness of the traditional knowledge and the effectiveness of the genetic resources. Moreover, we demonstrate that bioprospecting definitely improves the South but does not always benefit the North.