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GTAP Resource #3018

"International Technology Spillovers. An intertemporal and spatial analysis with the ICES model"
by De Cian, Enrica and Ramiro Parrado

The intersection between international trade and climate change brings some trade-off in policy design for both ambits. On the one hand trade barriers can be implemented to address competitiveness concerns raised by climate policy. On the other hand, policies that promote exports and foreign direct investments can increase the transfer of technology and knowledge. In addition, climate agreements do include specific provisions aimed at encouraging trade in energy goods and services. This paper uses a dynamic CGE (ICES) to assess the intertemporal and spatial dimension of international technology spillovers within a framework of climate and trade policy. The paper addresses issues such as the impact of spillovers on carbon leakage and explores on the effectiveness of Border Tax Adjustments. Three are the main contributions of the study. First, although the statistical effect of spillovers is energy saving, general equilibrium effects may revert their sign through price effects and thus substitution. A second result is related to the intertemporal dimension of the model. Over time, production of spillovers vehicle, namely machinery and equipment in this case, is reallocated towards destination countries. Moreover, spillovers augment this tendency generating a virtuous cycle. In fact, this effect contributes to enhance the absorptive capacity of recipient countries, increasing the potential benefits from technology transfers. Third, the presence of technology transfers offers an additional tool to address the issue of carbon leakage. So far the literature has focussed on BTAs as one of the trade options that can be implemented to offset competitiveness concerns within climate policies. However, that literature neglected the negative side effect such measures can have on technology transfers. On the contrary, trade liberalization, by increasing the effects of spillovers, may reduce carbon leakage indirectly.

Resource Details (Export Citation) GTAP Keywords
Category: 2009 Conference Paper
Status: Published
By/In: Presented at the 12th Annual Conference on Global Economic Analysis, Santiago, Chile
Date: 2009
Version: 04/2009
Created: Parrado, R. (4/14/2009)
Updated: Parrado, R. (3/31/2014)
Visits: 1,592
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