Directed Technical Change for Green Economy: The Role of Innovation and Technology Spillovers

This paper reviews the models of directed technical change in the environmental context, both theoretically and empirically, with a specific emphasis on cross-sector technology spillovers. It is well-established that the direction of technological change is not uniform across production factors and does not progress neutrally. The objective is to assess whether empirical literature aligns with the theoretical insights of the model. Also, we aim to determine whether cross-sector technology spillovers impact the direction of innovations through changes in relative productivity levels during the transition process to a low-carbon economy. Our review suggests that the empirical literature is mainly expanding with research on energy types, cost, and efficiency measures and directed innovations in clean technologies are responsive to environmental policy. A limited number of studies reveal the significant impact of spillovers in directed technical change models, contributing to the advancement of clean energy and the fight against climate change. Overall, the interplay between cross-sector technology spillovers and environmental policies promoting green innovation may provide valuable insights into efforts to fight against climate change.