Integration of Sustainability Innovations in the Catching-Up Process
Information:PD Dr. Rainer Walz, Fraunhofer Institute for Systems and Innovation Research
Partner: TU Berlin, Chair for Innovation Economics
Funding: German Federal Ministry of Science and Research (BMBF)
There is general consensus that environmental sustainability requires an integration of environmental friendly technologies in the economic catching up process of Newly Industrializing Countries (NICs). This challenge is also discussed within the concept of the Environmental Kuznets Curve (EKC). According to the EKC-hypothesis, environmental pressure grows faster than income in a first stage of economic devel-opment. This is followed by a second stage, in which environmental pressure still in-creases, but slower than GDP. After a particular income level has been reached, environmental pressure declines despite continued income growth. Graphically, this hypothesis leads to an inverted U-curve similar to the relationship Kuznets suggested for income inequality and economic per capita income (Figure 1).
Figure 1: Concept of tunneling through the Environmental Kuznets Curve
Within the global environmental debate, it is argued that NICs do not necessarily have to follow the emissions path of the industrialized countries. An alternative devel-opment path can be labeled “tunneling through the EKC” or “leapfrogging”. It is argued that countries catching up economically can realize the peak of their EKC at a much lower level of environmental pressure than the developed countries. Developing coun-tries could draw on the experience of industrialized countries allowing them to leapfrog to the latest sustainability technology. This leads to a “strategic tunnel” through the EKC. Two critical questions to this concept have to be addressed:
First, are the countries – given their stage of development - able to absorb the latest sustainability technologies and thus to leapfrog?
Second, is the interest of the NICs strong enough to push in that direction? In addition to contributing to mitigate environmental problems, further incentives are improvement of infrastructure and the economic incentive of competing with the traditional industrialized countries for lead roles in supplying the world market with sustainability technologies.
Both aspects require that domestic competences in sustainability related science and technology fields are build up in NICs. The ISI-CUP project aimed at analyzing whether or not this process has already started in selected NICs. Key results of the project are presented on this web page. This information is relevant for various actors:
Environmental policy makers, which are interested to learn about the pro-spects of technology transfer.
Industrial policy makers, which are interested whether or not NICs will develop capabilities to compete for the emerging markets in green technologies.
Players from industry, who are interested to learn about absorptive capabilities in future markets, and increase of competences in countries for which they are looking for strategic partnerships.
The project was running from 2006-2010, and has been supported by the German Federal Ministry of Science and Research within the research program “Economics for Sustainability”. It was coordinated by Priv.-Doz. Rainer Walz from Fraunhofer ISI. It used a top-down indicator approach (see methodology sheet) to assess the capabilities in the NICs. Important cross cutting results are presented in the overview. A more de-tailed presentation with statistical data can be found in the country profiles.