The role of foreign direct investment and intellectual property rights in economic development is discussed widely in the literature. However, an integrating framework is missing to assess the role of FDI and IPR for agricultural development. This paper establishes a framework to assess the role of FDI and IPR for seed sector development in developing countries. The impact assessment is carried out with a System Dynamics model that shows local capacity development to develop new seed varieties in the scenario of a multinational company penetrating the market and spillovers occurring. Simulation runs reveal the impact of IPR on the quantity technology transferred by multinational companies and on spillovers. The development path of the local industry depends crucially on the capacity of the local seed sector when the multinational company enters. A pattern for seed sector development is derived.