Clean Technology Transfers and North-South Technological Gap: an Important Issue for Environmental Policies

This paper aims at discussing the main stakes of clean technology transfer between the North and the South in a context of economic globalization and climate change. We present a model of environmental taxation between two asymmetric countries, the North and the South. It shows that (i) there exists a technological gap between the North and the South which results from an imperfect absorptive capability of the South ; (ii) this absorptive capability defines the rate of innovation in clean technologies for the South ; (iii) this technological gap contributes to explain why the South pollutes more than the North in a non-cooperative game in which the environmental tax rates determine the location of the firms ; (iv) cooperation is possible only if a financial transfer between the North and the South can be set. This financial transfer is a measure of the cost of this so-called Win-Win strategy according to which more outward-oriented policies would improve the environmental quality and increase the revenues of developing countries.