Stimulating innovation and the international   diffusion of environmentally responsive technology : the   role of expenditures and institutions

Lanjouw, Jean Olson; Mody, Ashoka

Stimulating innovation and the international diffusion of environmentally responsive technology : the role of expenditures and institutions

Lanjouw, Jean Olson | Mody, Ashoka

This paper explores the links between environmental regulation and the creation and spread of pollution control technologies. Time patterns in environmental expenditure and patenting for different countries reveal clear innovation responses to the demand for new technologies, typically with a 1-2 year lag. However, domestic innovation is only one path to new technologies. Developing countries often choose to obtain both embodied (in equipment) and disembodied environmental technologies from countries (particularly the United States, Germany and Japan) that had relatively early and stringent environmental controls. However, developing country innovators themselves have obtained a non-trivial number of patents, most of which, the authors' analysis suggests, are geared towards adapting imported technology to local conditions.

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