Technology transfer and innovation through trade; assessing the role of low carbon technologies imports on domestic green innovation

Low carbon technologies (LCTs) are anticipated to stir up global green innovation (GI) initiatives and lead the world into a sustainable future. Since the production of LCTs is mainly in advanced economies, trade in these technologies remains paramount in ensuring their dispersion. However, there is currently one big question: does importing LCTs contribute to boosting domestic green innovation? This research employs robust econometric techniques to test this broad hypothesis using data from 32 countries from 1996 to 2020. For the direct effect, our econometric approaches find statistical indications that LCT imports boost domestic green innovation. However, the statistical significance of our findings is inconsistent across the various econometric techniques. The analyses further indicate that green taxes and environmental policies moderate the LCTs imports and GI nexus. Finally, the results establish that LCT imports attract foreign investments, which in turn, contributes to increasing GI. Countries are thus advised to explore measures such as further lowering import tariffs on LCTs, establishing trade agreements dedicated to these technologies, and offering enhanced incentive packages to drive domestic production and usage of LCTs.