The international economics of resources and resource ... - Index of

Competences for green development and leapfrogging 263
system. Thus, the latter must be tailored to enhance further innovations.
Strengthening environmental regulation must be seen not as a trade-off between
environmental protection and economic development within the NICs, but as an
instrument of demand side driven innovation policy in one of the most dynamic
growing economic sectors. This also calls for integration of the traditional R&D
policies with the demand side oriented policies, which are typically performed by
different actors—a challenge which is not unique to NICs, but which can be found in
almost every OECD country, too.
The analysis in this paper relied on various indicators. However, the limits of such
an indicator approach have to be kept in mind: the indicators serve as a proxy for
both the absorptive capability of the NICs for sustainability innovations and the
ability to compete on international technology markets. However, the indicators of
technological capability should not be misinterpreted as a proxy for measuring if the
country moves towards sustainability. They neither cover the diffusion of the
technology nor the contribution of the potentially sustainable technology towards
environmental improvement. Thus, this indicator approach does not allow answering
the question, whether the incentives for moving towards environmentally friendly
production and products are stronger than the incentive stated in the pollution haven
hypothesis. More empirical research is needed to come up with answers for this
question.
The used indicator concepts have been derived from experience within OECD
countries for goods with above average technological content. Even though
sustainability technologies are typically also having an above average technology
content, there still might be a problem that the indicators do not account for
innovations which are not internationally patented because of a low propensity to
patent in the country/region or because the innovation is taking place in sectors
where it is more difficult to obtain patents (e.g. services).
There are also missing factors which the indicators cannot account for. Due to
the environmental externality problem, the formation of demand depends strongly on
environmental policy. Thus, together with the problem of externalities of R&D,
environmental innovations face a “double externality problem” (Rennings 2000).
Furthermore, especially sustainability innovations are rather often associated with
sectors which are subject to economic regulation. Thus, sustainability technologies
in these sectors even face a triple regulatory challenge (Walz 2007). This also leads
to the conclusion that policy coordination between the different regulatory regimes
becomes a major challenge for policy making. However, there is the need for further
empirical research to analyze if and how NICs are coping with this challenge.
Social factors are another issue which play a very important role, but are not
adequately addressed in the indicator approach so far. The importance of innovations
in institutions, or knowledge spillovers from other sectors can be added to that list,
together with the important aspects of communication patterns within the system of
innovation, lock-ins, path dependency, and power structures within industry and
politics (Walz and Meyer-Krahmer 2003).
Thus, to sum up the argument, indicators can be helpful to give an overview and
form a basis for a first assessment of likely strengths and weaknesses of countries,
and the resulting (economic) perspectives of leapfrogging in the fields of
sustainability technologies. However, they are not able to answer all of the arising