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The role of multinational firms in the diffusion of green technologies to developing countries

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Business and transfer of green technologies

An EU team studied the role of corporations in transferring environmentally friendly technologies to developing countries. Multinationals have been supporting foreign research, motives being technology sourcing and local product adaptation.

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Developing countries are a key part of United Nations (UN) strategies on limiting climate change, though such plans depend on access to green technologies. Generally, western businesses own and control the technologies, giving those companies a central role in technological transfer to the developing world. The EU-funded GREENSPILL (The role of multinational firms in the diffusion of green technologies to developing countries) project investigated such roles. Objectives included studying multinational firms' motives, documenting the environmental effect of technology transfers, and defining the policy implications of the role of multinational companies (MNCs). Results yielded new evidence of the internationalisation of green research and development (R&D). MNCs no longer keep their R&D investment close to home, and increasingly conduct research in developing countries. In such companies, about 17 % of recent patents were developed by inventors abroad from the company's location. China is one of the major targets for multinational green activity, with the others being Organisation for Economic Co-operation and Development (OECD) countries, followed by India and Taiwan in 19th and 20th places. The study concluded that technology sourcing and local product adaptation are the major reasons MNCs conduct research abroad. Factors may include a good supply of technical staff and a prominence of technological industries in the local infrastructure. Doing research abroad also helps open markets in those countries. MNCs often lodge patents in countries where they expect higher sales. Furthermore, the costs of such research work out cheaper. Local environmental policies also play a role in attracting foreign green R&D investment and in creating a market for the products. Study of the trade-off between green innovation and pollution-haven effects showed that multinational firms concentrate their polluting activities in developing counties. Yet, stringent environmental policy can both increase green innovation and clean up production. Project results favour 'technology optimists' in terms of environmental solutions. Further results detailed the impact of green technologies on energy-intensive production and assisted investigation of the differences between small and large innovating firms in technological transition. GREENSPILL clarified the role of MNCs in transfer of environmentally friendly technologies to developing countries. The topic formed part of a broader policy response to climate change and other major global issues.


Green technologies, developing countries, technology sourcing, product adaptation, multinational firms

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