Evaluating the role of technology and technological spillovers on CO2 emissions

It is recognized in the literature that advances in technology are one of the main mechanisms to increase technical efficiency and production with less use of inputs. However, technological advancement can also lead to increased emissions due to rebound effects or the Jevons paradox phenomenon. The purpose of this study is to evaluate the role of technology and technological spillovers in CO2 emissions. In a complementary way, the hypothesis of the inverted U-shaped relationship between CO2 emissions and industrial value added is empirically evaluated in a panel of country-sector data. Results show that both the stock of R&D and domestic R&D spillovers play a significant role in reducing CO2 levels. There is weaker evidence for foreign R&D spillovers.