Green Transformation and Competitive Advantage: Evidence from Developing Countries

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GGKP News
8 August 2018

Developing country governments are increasingly committing to ‘greening’ their economies, most explicitly under the Paris Agreement, where nearly all governments agreed to establish national roadmaps for decarbonisation. Many developing country governments have furthermore enacted comprehensive national green growth strategies aimed at reducing their environmental footprints and turning this into new competitive advantage. Yet, empirical evidence on the economic co-benefits and costs of green transformations in terms of competitiveness, employment and wealth creation is still scarce.

In this context, the German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE), Green Growth Knowledge Platform (GGKP), and the German Corporation for International Cooperation / Gesellschaft für Internationale Zusammenarbeit (GIZ) held a conference on the theme of "Green Transformation and Competitive Advantage: Evidence From Developing Countries" from 18-19 June 2018 in Bonn, Germany. The conference built on the collective work of the GGKP Trade and Competitiveness Working Group, which DIE and GGKP co-chair.

 

Gaining a competitive edge in the green economy

How does the adoption of green policies and practices affect competitiveness in developing and emerging countries? Can emerging economies compete in the green race? What policy incentives promote low-carbon innovation in firms? Can green transformation enable countries to leapfrog into new competitive industries? These were among the many questions explored through the 40 papers presented at the Green Transformation and Competitive Advantage Conference, based on a Call for Papers issued by DIE and the GGKP Trade and Competitiveness Working Group.

The Call for Papers was inspired in part by Tilman Altenburg and Anna Pegels observation, while co-editing the UN PAGE Green Industrial Policy report with UN Environment’s Claudia Assman. They noted that (a) developing country governments hesitate to take action to green their economies out of fear that more jobs will be lost in polluting industries than would be gained in emerging green industries; and (b) there is very little empirical evidence on the economic co-benefits and costs of green transformations in terms of competitiveness, employment and wealth creation in developing countries.

Altenburg and fellow co-chair, GGKP’s John Maughan, re-oriented the GGKP working group around these needs, re-constituting the group and shaping the Call for Papers with an explicit focus on multi-disciplinarity.  The GGKP working group had hitherto focused on knowledge and data gaps for determining the competitiveness impacts of environmental policies in developing countries.

 

Leading research

At the conference in Bonn, papers were presented from top-ranked universities and research centres, including Harvard, Yale, Berkeley, Cambridge, Oxford, Peking University, Tsinghua,  Singapore National University, ETH Zurich, University of Cape Town, OECD and the World Bank. The papers covered a wide range of methodologies, including patent data analysis, qualitative case studies, econometric research, computable general equilibrium (CGE) modelling, technology foresight studies, and integrated assessment modelling.

Around fifteen outstanding papers will be submitted to a top academic journal. DIE, GGKP and GIZ selected three particularly policy-relevant papers to receive an award donated by GIZ: Greening industrialization: How a technology’s product architecture and use environment affect local low-carbon industry development by Tyeler Matsuo and Tobias Schmidt (both ETH Zurich); China's green transformation through Eco-industrial Parks by Douglas Zhihua Zeng (World Bank) and Lei Shi (Tsinghua University), and Electric two-wheelers in Africa? Markets, production and policy by Anthony Black (University of Cape Town), Justin Barnes (B&M Analysts, South Africa), Brian Makundi and Tobias Ritter (both University of Cape Town).

 

Conference outcomes

Overall, the conference documented a rapid uptake of green technologies in many developing countries, with some actually leading to enhanced competitiveness and employments gains, e.g. in renewable energy and agriculture. So far, the most impressive developments have been concentrated in a few emerging economies – China, India, and South Africa for example – whereas successful green economy reforms with economic co-benefits are still rare in poorer countries.

"The conference helped shed light on how going green can have positive outcomes for competitiveness and jobs in developing countries,” says Altenburg. “To what extent such co-benefits materialize strongly hinges upon policy design. More research is needed to understand the synergies and trade-offs between greening and economic development in specific country contexts. The GGKP has an important role in stimulating such research."

Maughan, building on his opening remarks, was optimistic but added a note of caution. “The conference showed how far along some developing economies have moved toward green competitiveness in new and dynamic industries. That is a hopeful message and one that we need to continue to promote. However, these successes focus almost exclusively on technological improvement. Will technology alone bring us resource efficiency? Will technology make up for our staggering losses of biodiversity? We need more than technology for a truly “green” transformation: we need to value our natural capital and shift toward a more circular economy.”

 

Photo coverage of the workshop is available here.

For more information on DIE’s work on Green Industrial Policy, please visit: http://www.die-gdi.de/en/research/green-industrial-policy