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2. Biotechnology: Generation, diffusion, and policy

2.1 Introduction
2.2 The generation of biotechnology: Invention and innovation
2.3 Economic effects of biotechnology
2.4 Implications for the third world
2.5 Recent additions to the literature
2.6 Towards a general research agenda
Annotated bibliography
For further reading

Martin Fransman

2.1 Introduction

Like new biotechnology itself, the study of biotechnology by social scientists is still in its infancy. While there is a wide consensus among governments, firms-both large and small, new and old-and scientists and technologists that biotechnology will have at least as broad an impact in the future as microelectronics and information technology, its potential has yet to be realized. This makes its study both interesting and dangerous. This follows from the great degree of uncertainty that is present in any new field of technology in the early stages of its development, and particularly a radical technology like biotechnology that will impact a broad range of products, processes, and industries.

Economists of different conceptual persuasions agree that changes in technology can have a major economic impact. As we have seen in Chapter 1, Schumpeter (e.g., 1966) in formulating his view on technological change and its economic effects, distinguished between invention, innovation, and diffusion. In the case of invention the ideas (sometimes embodied in material artifacts) that form the basis of the subsequent new technology are formulated. These ideas are used later to produce and sell new or improved products, processes, and services: that is, to innovate. In earlier work Schumpeter emphasized the role of the entrepreneur, who seizes the new body of knowledge made available by the invention process and transforms it into commercial output. Later, however, as corporations themselves grew in size and economic significance, Schumpeter increasingly stressed the importance of the formally organized search for new commercially exploitable knowledge embodied in the research and development (R&D) activities of these corporations. To analyse the economic impact of new inventions and innovations, however, Schumpeter pointed out that it is necessary to understand the diffusion process whereby new products, processes, and services are adopted and used by others in the economic system. The more widely diffused an innovation, all other things equal, the greater its effects.

Although writing from a perspective of neoclassical economics and emphasizing different secondary causal mechanisms, Hicks (1981) also sees invention/innovation as the 'mainspring' of economic growth. In his Nobel Prize address, Hicks analysed the process whereby invention-innovation provides an 'impulse' to the economy, raising output and thereby influencing wage rates and corresponding rates of profit. Subsequently, changes in relative factor prices induce factor substitution as well as secondary innovations, which he calls the 'children' of the initial impulse. These secondary effects also influence the ultimate equilibrium into which the economic system settles once the consequences of the initial impulse have been worked out.

The aim of this chapter is to examine critically the literature that analyses the socioeconomic implications of biotechnology. In doing so, the frameworks suggested by Schumpeter and Hicks will prove useful as a starting point. However, as we shall see, the framework will have to be modified and elaborated.

Biotechnology may be defined as 'the use of biological organisms for commercial ends'. According to this definition, biotechnology is almost as old as human civilization, as is clear from activities such as brewing of beer, fermentation of wine, and production of cheese. Since the early 1970s, however, biotechnology has received a significant boost from the introduction of a number of powerful new techniques known collectively as genetic engineering. These techniques (which will be considered in greater detail later) allow biotechnologists to alter the genetic structure of organisms by adding new genes that allow the organism to perform new functions. Genetic engineering together with other ways of manipulating and using biological organisms has provided a potent new set of possibilities with profound implications for a wide range of commercial activities, from agriculture to pharmaceuticals, chemicals, food and industrial to processing, and mining.

The potentially wide-ranging applicability of biotechnology invites comparison with microelectronics, and information technology, and this theme will be taken up in more detail later in this chapter. Certainly both sets of technologies share a number of important characteristics. Both consist of an interdependent cluster of technologies which jointly have a significant nonmarginal impact, modifying old products and processes and producing new ones in a large number of economic sectors. Both sets of technology are particularly worthy of examination as a result of the wide-ranging impulse, to use Hicks's terminology, that they provide for economic and social change. While biotechnology, strengthened relatively recently by the powerful new techniques mentioned above, lags behind microelectronics and information technology in terms of its current effects, there are some who believe that it will have at least as broad an impact as electronics in future years. Their arguments are discussed in more detail below.

In examining the relationship between biotechnology on the one hand and the economy and society on the other (with causal factors operating simultaneously in both directions), the first task is to identify the major questions that must be posed as a prelude to suggesting appropriate ways of analysing them. Here the frameworks put forward by Schumpeter and Hicks provide a useful starting point.

Since invention initiates the impulse and its effects, it is worth beginning by delving more deeply into the inventive process and its determinants. In the case of biotechnology, and particularly genetic engineering, this involves examining the scientific base which constitutes its backbone. To understand the contribution made by science to biotechnology it is necessary to examine the relationship between science, technology, economy, and society. Two opposing arguments serve to clarify the extreme positions. According to the first argument, science constitutes an autonomous subsystem within the broader socioeconomic system, operating according to its own internally generated determinants (for example, the objectives and relative degrees of influence of scientific institutions and scientists). Conversely, the second argument denies the autonomy of the science subsystem, holding that scientific activities are themselves shaped by technological, economic, and social determinants.

The importance of these arguments becomes clearer when they are translated into institutional terms and normative/policy questions are added. What is the nature of the relationships among (1) universities/ scientific research institutions; (2) firms which draw on scientific knowledge in creating technologies used to transform inputs into commercial outputs; and (3) economic processes and variables such as competition and prices? Furthermore, what kinds of relationships should be fostered, to the extent that they are amenable to policy measures, if science is to make an effective contribution to biotechnology and desired economic change? As will be shown below, policy-oriented literature has begun to emerge around questions such as these. Returning to Schumpeter and Hicks, however, these questions make it clear that the process of invention, which results in an 'impulse' being delivered to the economy and society, is complex and its determinants need to be analysed carefully.

In addition to these questions about the creation of biotechnological knowledge are issues connected to the appropriation of financial returns from such knowledge. According to some views, one of the fundamental differences between science and technology is that the former deals with 'basic' knowledge with no immediate commercial applicability, while the latter is commercially exploitable and is therefore a commodity that can be bought and sold. This dichotomy has important implications for the different structure and function of science-based institutions such as universities and government scientific institutions on the one hand, and technology-based institutions like firms on the other. In science-based institutions, the flow of information is relatively free through publication and other forms of dissemination of results, notwithstanding factors, such as competitive rivalries between scientists, that retard the flow of information. On the other hand, the technological knowledge base of a firm can be (though not in all cases) a major determinant of profitability. Accordingly, firms often take steps either to ensure that their knowledge base remains secret or to obtain legal guarantees, as in the case of patents, that other firms will not be allowed to use their knowledge.

However, this sharp distinction between science-based institutions and technology-based firms is to an extent challenged by recent events in the biotechnology area. In 1973 the first gene was cloned, and in 1975 the first hybridoma (fused cell) was created. In 1976, the first so-called new biotechnology firm - Genentech, a spin-off from university-based research-was set up to exploit recombinant DNA technology. In 1980, in Diamond v Chakrabarty, the United States Supreme Court ruled that microorganisms could be patented under existing law. In the same year, the Cohen/Boyer patent was issued for the technique related to construction of recombinant DNA. By the end of 1981, more than eighty new biotechnology firms had been established in the United States. In the same year E.I. du Pont de Nemours allocated $US 120 million for R&D in the life sciences; shortly thereafter, Monsanto committed a similar amount. Early attempts to exploit biotechnology commercially were based strongly on the fruits of university research. The resulting set of new interactions between the biological sciences on the one hand and firms, old and new, on the other influenced university research in ways that will be considered in more detail later in this chapter. At the same time, policy questions were posed about the extent to which international competitiveness depended on the appropriateness of national university functioning.

Firms also confronted difficult strategic problems as a result of the commercial potential of biotechnology. During the early stages, many of the large firms that made the strategic decision to move into biotechnology lacked in-house capabilities in fields that were becoming increasingly important, such as molecular biology, genetics, and biochemistry. Some firms, such as the large Japanese producers of pharmaceuticals, amino acids, and enzymes, compensated for such weaknesses by strength in complementary fields, such as bioprocessing, and by other complementary assets, such as strong marketing and distribution networks and links with financial institutions. Nevertheless, the longer-run strategic problems remained: how to develop a knowledge base in the new technology from which to appropriate adequate rates of financial return. A number of strategies formulated to address both this strategic problem, as well as their attendant social costs and benefits, will be assessed later in this chapter.

Small new biotechnology firms faced very different strategic problems. Although raising equity capital was facilitated in the early stages by the way in which biotechnology had caught the imagination of investors, more fundamental problems soon became apparent. (When Genentech shares were first sold on Wall Street in 1980 they set a record for fastest price increase, rising from $35 to $89 per share in 20 minutes. In 1981 the initial public sale of shares by Cetus established a new Wall Street record for the largest amount of money raised in an initial offering: $115 million.) The new biotechnology firms had a strong knowledge base in the disciplines underlying biotechnology, and soon began to develop capabilities in bioprocessing (i.e., downstream processing). Nevertheless, it gradually became clear that the transformation of such knowledge into value required additional complementary assets. Most important of these were marketing and distribution networks. New vaccines, drugs, diagnostic kits, or seeds, for example, have to be sold to be profitable, and this requires the kind of distributional channels that new biotechnology firms lacked. In view of the constraints on developing such channels, most new biotechnology firms were forced to conclude marketing agreements with large companies in the relevant areas, thus giving up part of the financial returns from biotechnological innovations.

The structure of the biotechnology sector, which is determined by the configuration of large firms, new biotechnology firms, universities, and government research institutions, as well as by the pattern of state intervention, differed between countries. In Japan, for example, new biotechnology firms have not emerged as they did in the United States. This is a result of several characteristics of the Japanese economy: (1) the constraints on labour mobility, which made it difficult for employees of large firms to leave and set up their own enterprises; (2) the absence of a venture capital market in a predominantly credit-based system; and (3) contractual practices in the universities, which constrain university staff from either setting up, or being personally remunerated by, commercial enterprises. In addition, a very different pattern of interaction between universities and industry exists in these two countries, and their pattern of state intervention in biotechnology has differed. These differences raise a number of questions about the relative efficiency of the different structural configurations, including complex questions of market and organizational failure, which will be examined in more detail later in this chapter. The implications for analysing the determinants of international competitiveness are clear.

It is evident from the discussion above that developing scientific knowledge and transforming it to technological knowledge are intricate processes with a large number of complex determinants. In the case of biotechnology, the processes and their determinants need to be studied far more closely. Before embarking on a study of the effects of new technologies, however, it is worth understanding why the technology that has been generated assumes the form and moves in the direction that it does. Furthermore, the effects of technical change feed back to influence subsequent rounds of generation of new technology (and in some cases to influence science itself). For example, as technology is diffused, its use under a variety of different circumstances leads to the generation of further technological change as constraints are encountered and improved methods are devised. In some cases, the problems and puzzles that arise in the diffusion process result in the development of new research agendas to be tackled by scientists and technologists. In some cases of biotechnology, such as protein engineering, it may yet turn out that the technological practice will do more for the development of science than the other way around. On closer inspection, therefore, it often turns out that invention, innovation, and diffusion cannot be neatly separated into linear, sequential stages. For example, in biotechnology, downstream bioprocessing (which involves resolving problems related to purification, development of sensors to monitor fermentation processes, and the development of more general process control technology) will have a major impact on the efficiency of the technology. Indeed, as will be examined later, it may well be that process innovations such as these become more important in genetic engineering than basic scientific innovations in terms of improved efficiency and therefore competitiveness.

While it is important, for the reasons given above, to understand the determinants of the generation of new technologies, it is nevertheless legitimate to assume that the new technology is given and then to examine its effects. Economists have a good deal to offer in terms of analysing impacts on economic variables, such as output, price, and distribution, using partial and economy-wide approaches. Although biotechnology is still new with the great majority of potential products still in the experimental stage, a few important studies have been done which examine the economic effects of biotechnology in selected areas. These studies will be critically reviewed later in this chapter.

Numerous questions have been raised regarding the implications of biotechnology for Third World countries. As in the case of microelectronics and information technology, the international diffusion of biotechnology is creating new opportunities in these countries and will do so increasingly in the future. This process is being assisted by the relatively low barriers to entry that currently exist in the development cycle in biotechnology. The relatively low barriers to entry are evident in the emergence of large numbers of new biotechnology firms in many industrialized countries, as well as in the biotechnology programmes being developed not only in larger Third World countries, such as India, Brazil, Mexico, and China, but also in smaller countries, such as Cuba, Venezuela, and Kuwait. The current low barriers to entry are, however, unlikely to remain a permanent feature of biotechnology. It is already becoming apparent, for example, that sophistication, scale, and therefore entry costs are increasing in the bioprocessing side of biotechnology. It is likely that larger size of enterprise will be an increasing advantage in the future. One reason for this is that economies of scale are beginning to be realized in bioprocessing. Another is the technological synergies that are increasingly becoming a major source of competitiveness. An example of such synergy is the convergence of microelectronics and information technology on the one hand and biotechnology on the other-the field of bioinformatics-in areas such as automated bioprocess control, automatic DNA synthesizers, protein modelling, and biosensors. Firms that either have in-house capabilities in the area of microelectronics, information technology, and scientific instrumentation, or like the large Japanese groups, are easily able to call on obligationally related enterprises for such expertise, are likely to develop considerable advantage in biotechnology. A third factor favouring larger size is synergy in distribution. For example, a firm with an extensive marketing network in conventional drugs will tend to be able to distribute new genetically engineered drugs at lower cost (by reaping the synergistic economies) than firms which lack this facility.

For all these reasons it is likely that the entry barriers will increase over time. However, this does not necessarily mean that Third World countries will be progressively excluded from participation as producers of biotechnology. Judicious control of the domestic market, particularly in the case of the larger Third World countries such as Brazil, India, and China, together with an appropriate set of science and technology policies which facilitate development of the necessary biocapabilities, may allow a country to participate actively as a biotechnology producer. The earlier example of microelectronics and information technology is instructive here. Despite similar economies of scale and attendant barriers to entry, countries like Brazil and Korea are managing to carve out areas that stand a reasonable chance of becoming internationally competitive. Second, Third World countries have the opportunity to opt for specialist niches in the international market. Finally, there are a number of areas in which their specific resources and problems will provide them with a decided competitive advantage. Examples include local plant varieties and diseases.

However, reference to opportunities in the field of biotechnology must not obscure the substantial difficulties that lie in the way of a successful entry into biotechnology, no matter how specialist the niche. Enough frustration has developed from post-war attempts to transfer science and technology to the Third World to require even the most optimistic person to remain cautious with regard to the prospects. For example, a Committee of Scientific Advisors from the United Nations Industrial Development Organization (UNIDO) evaluated Third World capabilities and facilities in search of a site for the new International Centre for Genetic Engineering and Biotechnology. The Committee noted serious weaknesses in key scientific disciplines, such as molecular biology, biochemistry, and genetics (UNIDO, 1986). The difficulties of developing such scientific capabilities in Third World countries, while simultaneously creating conditions necessary for successful operation and servicing of scientific laboratories and equipment, must not be underestimated. Scaling-up and development of efficient bioprocessing capabilities present additional difficulties. Even more problems arise in ensuring that the necessary links are established between the scientific base on the one hand and the productive using sector of the economy on the other. Despite these difficulties, the power and flexibility of biotechnology should allow many Third World countries to benefit from this technology.

As in the case of microelectronics and information technology, there is the potential to gain by using the fruits of biotechnology. In this connection, as will be seen in the literature survey below, a good deal of apprehension has been expressed regarding the increasingly proprietary nature of biotechnology. This is most evident in agriculture: many previous technological breakthroughs were made in public institutions, such as universities, government research centres, and international agricultural research institutes, and the resulting technological knowledge was disseminated relatively quickly and at relatively low cost. With the potential to patent microorganisms and new seed varieties, however, and in some cases to keep the knowledge underlying new agricultural products and processes secret, a good deal of agricultural research is moving into the private domain. In some cases, under circumstances that will be considered in more detail below, this may raise the cost of using new biotechnology-based products as the supplying firms set prices consistent with their attempts to maximize profits. This will have further consequences for diffusion rates, and thus output effects, as well as for distributional impacts.

Considering the effects of biotechnology in the Third World invites comparison with the Green Revolution, which refers to the development, using conventional techniques, of high-yielding plant varieties. As in the case of the Green Revolution, there is no inherent technological reason why biotechnology should not benefit the poor. In principle, genetically engineered saline-tolerance, pest and disease resistance, and nitrogen-fixation could have a significant effect on the incomes of the poor in Third World countries, even if, as in the case of the Green Revolution, they are slower to adopt the new technologies and their gain relative to richer farmers is reduced by longer-run decreases in commodity prices. In practice, however, as with the Green Revolution, the socioeconomic factors shaping the evolution of biotechnology are likely to favour the needs of those who constitute important sources of market demand and political influence. Despite such tendencies, the wide range and flexibility of biotechnology holds out at least the possibility of extending the agricultural revolution to geographical areas and agricultural products that have hitherto been largely unaffected while at the same time increasing the benefit derived by the poor.

This raises a large number of important policy questions for Third World countries. To the extent that they want to take advantage of biotechnology in productive activities, questions have to be asked and answered regarding the necessary preconditions, the constraints and the capabilities, that are required. For example, what is the best way for a country, given its particular circumstances, to go about developing general capabilities in genetic engineering and biotechnology? What factors should be considered in choosing areas of specialization? What sorts of science, technology, industrial, and trade policy should be adopted to facilitate the use of biotechnology in production? As will be shown in this chapter, while questions such as these have not yet begun to be examined, a fair amount can be learned from closely related issues in the literature on technology and development.

2.2 The generation of biotechnology: Invention and innovation

2.2.1 The scientific base
2.2.2 The technologies
2.2.3 The evolution of biotechnological knowledge
2.2.4 Appropriating the rent from biotechnological knowledge
2.2.5 The role of government

Social scientists have generally been reluctant to examine the causes of technical change, preferring instead to analyse its consequences. This is evident, for example, in the approach adopted by Hicks (1981) in his Nobel Prize address titled 'The Mainspring of Economic Growth', which was summarized in the introduction to this chapter. For Hicks, 'invention', which provides the major impulse for economic growth, remains exogenous to the economic system. Hicks's main concerns are the response of prices and profits to the impulse and the secondary innovations which they in turn induce. Similarly, until relatively recently (see Mackenzie and Wajcman, 1985), many sociologists of technology have been proponents of a technological determinism, whereby technology is seen to influence society unidirectionally.

The temptations underlying the bias to study the consequences of technical change are easy to understand. To begin with, technical change is a major force for economic and social change and social scientists are therefore correctly interested in the impact of changing technology. Furthermore, if the analysis were broadened to examine the causes of technical change, the task would be considerably complicated (and would present economists the additional problem raised by the need to consider determinants and processes that are not narrowly economic). For reasons such as these the causes of technical change, as Rosenberg (1982) noted, remain understudied.

Although understandable, this bias in the literature presents important difficulties. Since the analysis is partial, leaving out the determinants of technical change, technology is necessarily assumed to be static. This assumption more than any other has been the target of attack for students of technology, including economists interested in the process of technical change and related economic change.

However, far from being static, technology changes constantly, with important implications for studying the consequences of technical change. In short, understanding the consequences of technical change over time requires a more general conceptual framework which includes analysing the causes of technical change. Such a framework would acknowledge that the consequences of technical change also influence, through a variety of feedback mechanisms, the generation of further technical change with implications for later-round impacts of such change.

This section is devoted to an examination of the generation of biotechnology which at the same time will facilitate a critical review of the literature. The discussion is assisted by reference to Figure 2.1.

2.2.1 The scientific base

A distinct definition that draws a sharp boundary between science and technology is difficult, if not impossible, to produce. Science and technology frequently overlap. Nevertheless, it is possible to produce working definitions of science and technology that make a broad distinction. Accordingly, science may be defined as 'attempts to produce "basic" knowledge about natural phenomena which does not necessarily have any immediate commercial applicability'. Technology can be defined as knowledge related to transformation of inputs into commercial outputs, including production of new or different outputs.

Figure 2.1 Configuration of industries and institutions involved in biotechnology

Technological knowledge may be embodied in people, hardware (plant and equipment) and software, and forms of organization.

According to these definitions, biotechnology is related to science in the sense that the knowledge which underlies its three main technologies-recombinant DNA, cell fusion, and bioprocessing-clearly emerged from the science system. In a detailed account, for example, Cherfas (1982) traces the origins of biotechnology from the first recognition of DNA by Miescher in 1869, to Watson and Crick's model of the double helix in 1953, to the breakthrough of Boyer and Cohen on the recombinant DNA technique in 1973, and the work by Millstein and Kohler on cell fusion in 1975. A good deal of this work was influenced by research on the behaviour of bacteria and viruses and by the war on cancer. Despite the ultimately pragmatic objectives of such research, the research remained for the most part 'basic' in nature. Rosenberg (1982) points out that in many cases 'basic' knowledge has resulted from research undertaken with 'applied' motivations. This makes it difficult to sustain a distinction between basic and applied research in terms of the motivation for such research.

In this respect, biotechnologies contrast sharply with semiconductors, which developed largely, though not entirely, in response to the war and early post-war military demands of the U.S. Department of Defense (Borrus and Millstein, 1984). In contrast to biotechnology, whose major breakthroughs have occurred in universities, the transistor was invented in 1947 at Bell Labs, a part of AT&T which purchased its telecommunications equipment from Western Electric, its manufacturing arm. In 1959 the integrated circuit was invented at Texas Instruments and Fairchild, two small commercial companies which had spun off from Bell Labs. The milieu within which semiconductor technology was developed was therefore oriented more towards practical objectives than in the case of biotechnology, where 'basic' university scientific research, albeit health-related, played a more significant role. However, Borrus and Millstein (1984) can probably fairly be accused of being overly simplistic when they conclude that 'In the development of biotechnology, "science push", rather than the "market pull" that gave impetus to the US semiconductor industry, was particularly important' (p. 533).

Nevertheless, this dichotomy does raise the important question of what role the science base plays in science-oriented industries, such as microelectronics/information technology and biotechnology. Clearly, it is inadequate to see science as a subsystem, autonomous from the rest of the economy and society, or scientists as uninfluenced seekers of the truth attempting to understand the basic nature of the universe. The emergence of microelectronics/information technology and biotechnology has had a good deal to do with the twin social concerns-one may almost say neuroses-of military defence and health. Furthermore, scientific controversy and the progression of scientific ideas have often been greatly influenced by the interests of scientists themselves as some sociologists of science have documented (see Barnes and Edge, 1982, and references therein).

Neither can basic science that forms the core of biotechnology be assumed to be uninfluenced by commercial considerations or at least by the possibility of technological applications. Cohen and Boyer, for example, were aware of the commercial applicability of their recombinant DNA technique and this awareness led Stanford University to apply for a patent for the recombinant DNA (rDNA) process technique within the statutory one year after initial publication of results. In December 1980, Patent No. 4.237.224 was granted, providing for an initial nonexclusive licence fee of $10,000 and an equivalent annual amount for using the technique in research and development. In addition, the patent granted a royalty of I % on sales up to $5 million, falling to 0.5% on sales over $10 million. Since this technique is fundamental to work in genetic engineering, the implications for Stanford University funding are enormous. Stanford University subsequently filed a second patent on the products produced by the rDNA technique. [The Cohen and Boyer patent is discussed, for example, in Yoxen (1983, pp. 95-97), and U.S. Congress, Office of Technology Assessment (1984, Chapter 16).]

Millstein, who together with Kohler developed the cell fusion technique in 1975, was also aware to some extent of the commercial implications of his research. Accordingly, he wrote to the Medical Research Council informing them of the possible implications, hoping the National Research and Development Corporation (NRDC), which was responsible for commercialization and protection of intellectual property rights of inventions coming out of public laboratories, might make the necessary arrangements for patents. However, the NRDC did not act and the key patents to work on monoclonal antibodies were eventually taken out by American researchers. In 1980, partly in response to this failure, Celltech was formed by the British Technology Group, which took over the role of the NRDC, and the National Enterprise Board. The company was partly publicly and partly privately funded and was given exclusive access to the research output of the Medical Research Council's laboratories (see Yoxen, 1983, pp. 128-132).

These examples and their implications make it clear that, while there is a functional, institutional, and organizational difference between scientific establishments on the one hand and commercially oriented establishments on the other, neither are entirely self-contained but rather exert a mutual influence on one another. This suggests that a more general approach, which will consider these and other interactions, is needed to understand and evaluate the function of these organizations. This has important implications for the study of factors like international competitiveness.

2.2.2 The technologies

As is clear from Figure 2.1, the science base influences the development of biotechnologies. The influence is mutual, however, since problems and puzzles that arise in technological applications often feed back to determine scientific research agendas (see Rosenberg, 1982, on the notion of endogenous science).

In the case of biotechnology there are three closely related sets of technology (U.S. Congress, Office of Technology Assessment, 1984):

1. Recombinant DNA technology (rDNA) allows genes from different organisms to be combined within a single organism, enabling it to produce biological molecules which it does not normally create. In this way new products can be created or previously existing products, such as enzymes or other proteins, can be produced more efficiently. Applications for this technology include pharmaceuticals (for example, insulin, interferon, and interleukin); chemicals; food-processing; and modification of microorganisms that can then perform commercially useful functions (such as degradation of toxic waste products, or mineral leaching to assist in minerals extraction).

2. Cell fusion technology allows different cells to be artificially combined into a fused cell or hybridoma, which allows their desirable properties to be combined. For example, fusing an antibody-producing cell with a cancer cell results in a hybridoma that can produce pure antibodies, and that is robust and able to multiply continuously. These pure antibodies, or monoclonal antibodies (MAbs), can be used for diagnostic purposes in divergent fields such as human or animal health or to diagnose viruses in crops.

3. Bioprocess technology allows biological processes to be used for large-scale industrial purposes. Such processes typically involve reproduction of cells and microorganisms in an appropriate environment, and subsequent extraction and purification of the desired biological substances. Although not in itself a new technology, the efficiency of bioprocess technology is an important determinant of the price and quality of biotechnologically produced products. Some have suggested that protein engineering should be thought of as a second-generation 'new biotechnology' (see Fransman et al., forthcoming, for more details on protein engineering).

These technologies are not static; they are constantly being modified and developed. Examples include automated DNA synthesizers or 'gene machines' and, in the field of bioprocessing, immobilization techniques, biosensors, and automated process control.

Since this chapter mainly addresses socioeconomic aspects of biotechnology, scientific and technical factors are not discussed in great detail. Nevertheless, it is worth mentioning a number of sources that give a good introductory account of the scientific and technical aspects of biotechnology. These include Cherfas (1982), who gives a detailed historical description of the development of the main techniques used in biotechnology; and two issues of Scientific American (1981 and 1985), which provide details on the molecular and bioprocess underpinnings of biotechnology. Two major reports on biotechnology by the U.S. Congress, Office of Technology Assessment (1984, 1986) provide readable and well-illustrated accounts of the technology; the first addresses biotechnology in general while the second considers agricultural applications. Yoxen (1983) situates his discussion of the scientific and technical aspects of biotechnology in a broader societal context by examining the social implications.

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