## Green Innovation and Diffusion: Policies to Accelerate Them and Expected Impact on Macroeconomic and Firm-Level Performance

_Staff Discussion Notes, November 6, 2023_

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## Bibliographic details
- Authors: Zeina Hasna, Florence Jaumotte, Jaden Kim, Samuel Pienknagura, Gregor Schwerhoff
- Published: November 6, 2023
- Series: Staff Discussion Notes
- DOI: https://doi.org/10.5089/9798400256950.006

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### Summary findings
- Innovation in low-carbon technologies (LCTs) has slowed in recent years.
- A global climate policy strategy can bolster innovation in, and deployment of, LCTs.
- Countries that expand their climate policy portfolio exhibit higher:
  - (1) climate-change-mitigation-patent filings,
  - (2) LCT trade flows, and
  - (3) “green” foreign direct investment flows.
- Boosting innovation in, and deployment of, LCTs yields medium-term growth, which mitigates potential costs from climate policies.
- Evidence highlights the importance of international policy coordination and cooperation by showcasing potential climate policy spillovers.

### Evidence and empirical measures
- Outcomes associated with expanded climate policy portfolios:
  - Increased climate-change-mitigation-patent filings.
  - Increased LCT trade flows.
  - Increased “green” foreign direct investment flows.
- The note emphasizes measurable links between policy expansion and both innovation (patents) and diffusion (trade and FDI).

### Macroeconomic and firm-level impacts
- Medium-term growth gains from boosting LCT innovation and deployment can offset the potential short-term costs of climate policies.
- The analysis connects firm-level innovation outcomes (patents, FDI) to broader macroeconomic performance (growth implications).

### Policy implications and recommendations
- Expand climate policy portfolios to stimulate both innovation and deployment of LCTs.
- Prioritize international policy coordination and cooperation to capture spillover benefits across countries.
- Design climate policies recognizing their dual role in:
  - Directly reducing emissions, and
  - Stimulating innovation, trade, and green FDI that support medium-term economic growth.

### Publication and metadata
- Authors: Zeina Hasna, Florence Jaumotte, Jaden Kim, Samuel Pienknagura, Gregor Schwerhoff
- Date: November 6, 2023
- Pages: 31
- Series: Staff Discussion Notes No. 2023/008
- Issue: 008
- Volume: 2023
- DOI: https://doi.org/10.5089/9798400256950.006
- Stock No: SDNEA2023008
- ISBN: 9798400256950
- ISSN: 2617-6750

*Source: Staff Discussion Note 2023, 008, "Green Innovation and Diffusion: Policies to Accelerate Them and Expected Impact on Macroeconomic and Firm-Level Performance", November 6, 2023 (DOI: https://doi.org/10.5089/9798400256950.006).*

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_Source: https://www.imf.org/en/publications/staff-discussion-notes/issues/2023/11/03/green-innovation-and-diffusion-policies-to-accelerate-the-process-and-expected-impact-on-540134_