indirectly related to technology development, adjustment and transfer. Both the case studies (Forsyth, 1999; Duic et al., 2003; Forsyth, 2005;), the partial equilibrium (Kemfert, 2003), the general equilibrium (Sahlén and Aronsson, 2006), and the strategic approaches (Matsuhashi, Chang and Ishitani, 1999; Millock, 2002) suggest that there is no one policy that addresses similarly the issues countries face, but rather, each country or partnership that collaborates in the CDM setting needs a specific solution to allow technology and its transfer. Finally, an econometric study of the reported technology transfer by project types and countries suggests also a more microscopic analysis and understanding of the differences between determinants of technology transfer (Haites, Duan and Seres, 2006).

Present policies to technology transfer are criticized for not taking advantage of private sector capacities and international trade. Distinction is made between long-term technology sharing policies, used at present, that ignore the potential benefits of the globalization of technology investment and ownership (Forsyth, 1999). The present policy is claimed to be heavily subsidized and deterrence of private investors. Rather than having the state focus on the direct innovation development process, states could better impact development and transfer of technologies by improving fair trade policies, protect intellectual property rights, and increase public access to information about, technologies (Forsyth, 2005; Millock, 2002).

Early on, researchers noted that abatement costs and the shape of the marginal abatement curves play a crucial role in rates of technology transfer. For example, based on a comparison of input-output tables, Matsuhasi, Chang and Ishitani (1999) conclude that the potential for technology transfer between Japan and China is large under CDM; however, using game-theory and sensitivity analysis, they also show that small changes in underlying assumptions about the structure of abatement costs have significant consequences for predicted rates of transfer. They point to expected lower price of the technology and the potential for lower financial cost for the technology transfer and its positive impact on the economy as key factors affecting the economic viability of CDM technologies. Similarly, Duic et al. (2003) show that small changes in cost can dramatically change incentives to switch to new renewable energy technologies, even in a small economy of island nations such as Santiago and Cape Verde where carbon intensity is low but fossil fuel prices are high.

The global (both partial and general equilibrium) models demonstrate the importance of indirect effects of trade on the transfer of clean energy technologies and hence, on economic growth. Using a partial equilibrium model, Kemfert (2003) shows that trade barriers, would not only damage the economy, but could also deter investments in climate friendly technologies. Using a general equilibrium model, Sahlén and Aronsson (2006) add also labor barriers into the market of factors of production to account for north economies (capital intensive) and south economies (labor intensive).

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