Technological expertise as a driver of environmental technology diffusion through trade: Evidence from the wind turbine manufacturing industry

Only a small number of companies, located in a few countries, have specific technological expertise in wind turbine manufacturing. Such technological expertise is found to be a significant driver of trade in wind turbines. In addition, it is found that countries’ wind power generation efficiency depends on having access to higher quality wind turbines available in international markets. Trade in wind turbines can thus be seen as tantamount to trading (wind) technologies that deliver a level of efficiency that cannot be replicated in importing countries. These results have important policy implications: i) Barriers to trade in wind turbines are also barriers to the dissemination of key environmental technologies needed by countries where they have not been developed; ii) Trade-discriminatory measures can also be a hurdle to non-manufacturing job creation as the latter hinges on the continuous deployment of solar energy, which in turn depends on access to international markets where high quality wind turbines are found; iii) Industrial policies should not focus on the creation of national champions but rather on ensuring that domestic firms can apply their specific capabilities to new opportunities in global industries.