Trade in environmentally sound technologies can foster new industries, jobs, and income growth in developing countries, a new global study suggests.
The research, featured in the report ‘Trade in Environmentally Sound Technologies: Perspectives from Developing Countries’, highlights the importance of developing countries for future trade in environmentally sounds technologies and the need for their increased involvement.
Environmentally sound technologies, often also referred to as “clean technologies”, are a subset of environmental goods, defined as goods that directly contribute to environmental protection and climate change mitigation.
The report identifies developing countries that have transited from net importers to net exporters of clean technologies by embracing international trade and investment, which has enabled them to build up their technology and production capacity. As a result, new green industries have emerged as well as growth in incomes and job creation, thus demonstrating how trade in environmentally sound technologies can offer a triple win for the environment, economy and society.
The research suggests other developing countries have the potential achieve similar outcomes with the necessary domestic policies and technological effort. In this respect, the report recommends that initiatives to support the trade in clean technologies at the international level should be supported by measures at the domestic level, including through capacity building and technical assistance.
“The findings from this study offer important insights that can support and enable developing countries to objectively assess and understand the opportunities, benefits and challenges of liberalized trade in clean technologies,” Anja von Moltke from UN Environment said. “Investing in trade, innovation and use of clean technologies can drive sustainable development by tackling climate change, building resilience and supporting the achievement of the Global Goals and the Paris Agreement”.
The report, published by UN Environment’s Environment and Trade Hub, Oxford University’s Technology and Management Centre for Development and the Department of Industrial Economics and Technology Management at the Norwegian University of Science and Technology suggests that building knowledge and capacity is critical to support developing countries in assessing the opportunities and challenges of the trade in clean technologies. This can help inform decision makers of the potential benefits of participating in specific trade negotiations. The analysis also points to the importance of reducing or eliminating tariff and non-tariff barriers to catalyze greater participation by developing countries’ in value chains, thus bolstering economic and environmental resilience and driving sustainable development.
“Through trade in clean technologies, developing countries also have access to the technologies and other intangible intellectual capital which are embedded in and transferred through the trade in these technologies,” explained Professor Xiaolan Fu of Oxford University. “This is of crucial importance for capability building and industry upgrading in the developing countries.”
“To gain a full picture of opportunities and challenges for developing countries related to the liberalization of trade in environmentally sound technologies, it is necessary to consider macroeconomic aspects of global trade, but also to take a closer look at the micro level and assess implementation-level environmental and social impacts of identified ESTs,” said Haley Knudson, PhD Candidate at the Department of International Business, NTNU.
The project was supported by the European Commission through the Global Public Goods and Challenges Programme.