At Home and Abroad: An Empirical Analysis of Innovation and Diffusion in Energy-Efficient Technologies

Abstract

SummaryThis paper contributes to the induced innovation literature by extending the analysis of supply and demand determinants of innovation in energy-efficient technologies to account for international knowledge flows and spillovers. In the first part of the paper we select a sample of 38 innovating countries and we study how knowledge related to energy-efficient technologies flows across geographical and technological space. We demonstrate that higher geographical and technological distances are associated with a lower probability of knowledge flow. In the second part of the paper, we use our previous estimates to construct stocks of internal and external knowledge for a panel of 17 countries and present an econometric analysis of the supply and demand determinants of innovation accounting for international knowledge spillovers. Our results confirm the role of demand-pull effects, as proxied by energy prices, as well as that of technological opportunity, as proxied by the knowledge stocks. In particular, this paper provides evidence that spillovers between countries have a significant positive impact on further innovation in energy-efficient technologies. Keywords October 2009Abstract This paper contributes to the induced innovation literature by extending the analysis of supply and demand determinants of innovation in energy-efficient technologies to account for international knowledge flows and spillovers. In the first part of the paper we select a sample of 38 innovating countries and we study how knowledge related to energy-efficient technologies flows across geographical and technological space. We demonstrate that higher geographical and technological distances are associated with a lower probability of knowledge flow. In the second part of the paper, we use our previous estimates to construct stocks of internal and external knowledge for a panel of 17 countries and present an econometric analysis of the supply and demand determinants of innovation accounting for international knowledge spillovers. Our results confirm the role of demand-pull effects, as proxied by energy prices, as well as that of technological opportunity, as proxied by the knowledge stocks. In particular, this paper provides evidence that spillovers between countries have a significant positive impact on further innovation in energy-efficient technologies.

Technology innovation and diffusion in “less than ideal” climate policies: An assessment with the WITCH model

“…A set of recent empirical studies, assessing the technology transfers embedded in Clean Development Mechanism (CDM) projects, indicates that the second effect tends to be stronger, confirming the importance of capability in receiving countries (Dechezleprêtre et al 2008;Seres et al 2009). Verdolini and Galeotti (2009) also confirmed that knowledge increases the ability to benefit from disembodied international spillovers in the context of energy-efficient innovation. Keller (2004) reinforces this view in his survey of international knowledge spillovers by showing that an R&D effort is needed to absorb international knowledge.…”

“…Peri (2005) studied the flow of knowledge across different countries in Europe and in North America, finding that aggregate innovation depends on internal and external knowledge. More recently, Verdolini and Galeotti (2009) used patent data for a group of OECD countries to study the determinants of innovation and the channels through which knowledge flows across countries. They suggested that more knowledge flows occur between innovator leaders and between similar countries.…”