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Industrial Policy and (Clean) Growth

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Is a transition to a cleaner economic system compatible with economic growth in the short run? We argue that this is only possible if clean technologies generate more economy wide knowledge spillovers than (dirty) technologies associated with pollution. Using evidence from global patent data we show that clean technologies indeed generate more knowledge spillovers. This result is robust to a wide range of robustness checks including a new method to measure knowledge spillovers that we call Patent Rank. Patent Rank considers both direct and indirect knowledge spillovers. PatentRank can also be used to design a vertical industrial strategy by highlighting sectors and technology areas that generate more knowledge spillovers either globally or for specific countries. We use this to examine which clean technology areas should be supported in various countries; e.g. in the UK ocean energy and clean aviation technologies a prime sources of knowledge spillovers. We also examine how a strategy based on patent rank interacts with regional economic policy.

This talk is part of the Land Economy Seminars Lent 2019 series.

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