WASHINGTON, DC—If one region of the world switches its research effort from dirty to clean technologies, will other regions follow? That is the central question explored in a new study posted today by Resources for the Future (RFF). And the answer may be that it’s possible, but it depends.
The authors are Dr. Jan Witajewski-Baltvilks, University of Warsaw, and RFF Senior Fellow, Prof. Carolyn Fischer of the Vrije Universiteit in Amsterdam and the University of Ottawa. Their new study is titled, Green Innovation and Economic Growth in a North-South Model.
The authors clearly state the problem that their new research addresses: “The problem of greenhouse gases (GHG) is usually considered an example of the tragedy of the commons. Given that emissions are produced by all economies, an effort to limit emissions by a single region will only have a minor effect on the total stock of GHG in the atmosphere and thus cannot prevent potential environmental disaster caused by the greenhouse effect.” The question is whether innovation and trade in clean technologies can allow a single region to avert a tragedy.
To formalize their work, the researchers developed a Directed Technological Change (DTC) model for two stylized regions, one called North, which decides to go clean first, and the other South, which starts out specialized in dirty technologies. The economic model features region-specific demand for final goods, production of intermediate goods, and sector-specific technologies for which the blueprints are developed through research. Technologies may be traded, although blueprints are not necessarily adaptable to the other region.
In the final analysis the researchers state: “After the North switches from dirty to clean technologies, the growing value of clean markets will motivate technology firms in the South to follow the switch; however, this result is conditional on the North being sufficiently large.”
Read the full study: Green Innovation and Economic Growth in a North-South Model.
Resources for the Future (RFF) is an independent, nonprofit research institution in Washington, DC. Its mission is to improve environmental, energy, and natural resource decisions through impartial economic research and policy engagement. RFF is committed to being the most widely trusted source of research insights and policy solutions leading to a healthy environment and a thriving economy.
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