Economic Research and Perspectives

Economic Research and Perspectives

Evolution of Green Technology, Technology Gap and International Trade A Comparative Study of Developing and Developed Countries

Authors
Mehrnoosh Patimar 1
Zahra Zamani 2
1 M.A Faculty of Commerce, university of Sheikh Baha'i, Isfahan, Iran
2 Postdoctoral Researcher, Faculty of Administrative Sciences and Economics, University of Isfahan, Isfahan, Iran
10.22034/24.4.29
Abstract
Aim and Introduction

Trade is one of the most important factors for the economic progress of countries, which has become feasible with the globalization of business. In addition, the significant increase in energy consumption after the industrial revolution, aimed at improving the quality of human life, has led to increasing environmental degradation worldwide. Although economic growth is one of the main goals of countries, developed economies are more concerned about its environmental consequences. Unfortunately, it seems that developing countries often overlook environmental protection in their pursuit of desired economic growth.

Green technology is a form of technology that aims to minimize the environmental damage caused by energy consumption by increasing energy efficiency. Examples of this technology include renewable energy sources, energy efficiency measures, waste management, environmental monitoring systems, and electric vehicles, all of which contribute to significantly improving the quality of environment. Green technology and its positive consequences serve as a turning point for mitigating environmental damage and, most importantly, preventing further harm. It has proven to be highly effective and requires the collective efforts of all countries to achieve their economic goals while preserving and expanding their trade relationships, ultimately bringing their technological levels closer together.

Methodology

This research aims to investigate the technology gap and green technology and its effects on international trade between developed countries (Japan, South Korea, France, Germany, the United States, China) and developing countries (Iran, Turkey, Azerbaijan, Tajikistan, Pakistan, Kazakhstan, Kyrgyzstan, Uzbekistan). The study utilizes the gravity model and STATA software, analyzing the coefficients obtained from this model to examine how green technology development can have a positive impact on both environment and business. The data used in this analysis spans during 2008 - 2019 and is sourced from UNCTAD and WORLD BANK.

Findings

Based on the estimated results of this study, it has been determined that in developing countries, Gross Domestic Product (GDP) of the first country had a significant and positive impact on their trade. Therefore, a 1% increase in their GDP leads to an 0.84% increase in their trade. On the other hand, the impact of GDP for the second country is positive but not significant.

Furthermore, in developed countries, a positive and significant effect of Gross Domestic Product (GDP) on international trade is observed. A 1% increase in GDP for this group of countries leads to a 13.1% increase in trade for the first country and a 9.4% increase for the second country. Therefore, it can be concluded that an increase in production capacity creates greater capabilities for both groups of countries to enhance exports and trade.

The geographical distance has a significant negative impact on trade in both groups of selected countries. Therefore, a 1% increase in geographical distance leads to a 0.3% decrease in trade for developed countries and a 0.5% decrease in trade for developing countries. As a result, countries tend to prefer trading with their neighboring and geographically closer countries due to economic advantages, especially in transportation sector.

Technology gap has significant negative implications for developed countries and significant positive implications for developing countries. This means that with a one percent increase in technology gap between these countries, the trade of developing countries increases by 0.45 percent and the trade of developed countries decreases by 0.19 percent. Technology gap is considered a trade barrier in developed countries, while it is seen as an advantage in developing countries.

The impact of green technology is positive and significant in both selected groups of countries. One percent increase in green technology transformation results in a 0.91 percent and 1.91 percent increase in trade for developed and developing countries, respectively. This indicates that the adoption of green technology not only does not hinder international trade but can also strengthen trade relations in the green pathway.

Discussion and Conclusion

Transformation of green technology has had a significant and positive impact on trade for both groups of selected countries. This indicates that green technology has found a suitable position in advancing international trade for these countries.

Considering that green technology has a significant impact on development issues and the importance of preserving a clean and sustainable environment for future generations, as well as in line with the findings of this research, governments and societies should invest more in greener and more complex sectors. They should enhance their technical skills and develop the necessary technological infrastructure for the growth of green industries. Additionally, the international community should expand the support for emerging green industries in developing economies by strengthening global trade regulations, particularly through increased efforts by developing countries to acquire this technology.

According to the results obtained, the impact of technology gap on international trade among developing countries is positive and significant. This means that as the technology distance increases, bilateral trade between these countries also increases. Therefore, the mentioned countries, due to their lower level of technology, have a strong inclination to import technology and engage in trade with each other.

Based on the findings of this research, which identifies the technology gap as a stimulating and influential factor in increasing trade among these groups of countries, it is suggested to prioritize the advancement of technology for all countries. It is recommended to maintain a certain level of technology gap in developing countries while simultaneously pursuing alternative policies to harness its positive impact on trade
Keywords
Green Technology Evolution
Technology gap
International Trade

Subjects

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Economic Research and Perspectives
Volume 24, Issue 4
Winter 2024
Pages 29-52