A north-south model with technological spillovers, environmental degradation and structural change

This paper argues that boosting structural change in the world economy is a perspective way to mitigate climate changes. We analyse the dynamical R&D spillovers and cooperation between two sufficiently close economies under endogenous turnover of sectors (structural change). It turns out that the costless spillover of technology from one country to another accelerates structural change in both economies while increasing productivity in the lagging country only. If new technologies are progressively cleaner we show that such an increase in the speed of adoption of newer technologies leads to the slowdown of environmental degradation as measured by surface temperature. We conclude that technological spillovers and cooperation are beneficial both for the economy and environment provided participating parties are close enough in their technologies.