# **Introduction**

The objective of the paper is to lay out the state of knowledge on the role of innovation and the diffusion of technologies in the greening of global value chains as well as some of the main policy issues and key research gaps<sup>3</sup> . A special emphasis will be put on developing countries in which innovation, skills and technological absorptive capacities tend to be lower while green technologies are urgently needed. The structure of the paper is extremely simple. In the first part, we give some concepts and definitions on technology, innovation, and the channels of technology diffusion. In the second part, we use various statistics (green patents, trade flows, and foreign direct investments) and illustrative examples to describe how technology and knowledge are created today and disseminated across countries. For data reasons, we mostly focus on climate-mitigation technologies, but there are good reasons to think that other green technologies do not significantly differ from the “average” climate mitigation technology. Then, we list and discuss key policy challenges (the role of environmental policies, intellectual property rights, capacity building, etc.). The conclusion summarizes the main lessons.

The so-called “green economy” does not consist in the creation of a new economy, but mostly, in the gradual greening of existing traditional economic activities. The concept of green technology is extremely vast as this refers to the use of technology that makes traditional products and processes more environmentally friendly, for example, by reducing CO2 emissions, by making products more biodegradeable, etc. In practice, many green technologies are cleaner variants of standard technologies. It follows that most of the mechanisms and trends discussed below are not specific to green technology. This is good news as we can rely on many results from a well-developed general literature on the interactions between globalization and technology.

# **1 Concepts and Definitions**

## **1.1 Technology Is Information**

From an economic perspective, technology consists in the application of information either _tacit_ (know-how, skills) or _coded_ (drawings, models, chemical formulas) in the design, production, and utilization of goods and services. In contrast with science, the creation of new technology is primarily a business matter. As an illustration, the share of climate-related patents – protecting technologies aiming at reducing greenhouse gas emissions – filed by public bodies is on average less than 10 percent in most countries.<sup>4</sup> Contrary to standard tangible goods, technology and knowledge production and dissemination inevitably involve a public policy dimension. The fundamental reason is that information has public good properties: it is _non-rival_ in use - information is not exhausted after its use by the innovator – and

> 3 The paper is partly derived from a study recently commissioned by the French Council of Strategic Analysis (2013) which deals with the specific case the international diffusion of climate-friendly technologies (Glachant, Dussaux, Ménière and Dechezleprêtre, 2013). The author also thanks Nick Johnstone, Giuseppe Nicoletti, Annabelle Mourougane for their helpful comments. The usual disclaimer applies.

> 4 China, with more than 40 percent, and France and Korea around 15 percent constitutes three exceptions. In L’innovation technologique face au changement climatique: quelle est la position de la France ? Yann Ménière, Fabrice Carrère, Antoine Dechezleprêtre, Matthieu Glachant, Gilles Le Blanc, Cécile Pot.

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