Abstract

     The purpose of this paper is to examine and compare the contributions to environmental innovation of the public sector and private sector, respectively, and to compare their determinants. We analyze the development over time of triadic patents, classified as environmental technological innovations, for six major patenting countries from 1990 to 2014. This is done using a factor decomposition analysis framework. The analysis is done at both country aggregate level, and for a set of specific technological topics: alternative energy production, energy conservation, agriculture and forestry, and waste management. Results indicate that there has been a shift at an aggregate level towards environmentally sustainable technologies. In the private sector, the shift can be attributed to changes in research priorities and an increased scale of R&D. In the public sector, increased patenting of environmentally sound technologies can be attributed to efficiency gains. The largest difference between the public and private sector is observed in R&D efficiency, where in the private sector, reductions in efficiency have contributed negatively to patent growth, whereas the opposite is true for the public sector. In both sectors, research focus has shifted towards energy-related technologies.

Introduction

     Technological innovation is an integral part of economic development, and a necessary condition for creating an environmentally sustainable society and limiting climate change (European Commission, 2011; Popp, 2019; The White House, 2021). The private sector is frequently argued to be generally more suitable for innovation, based on the efficiencies associated with market forces and competition (Archibugi and Filippetti, 2018). Consequently, it has been suggested that the public sector’s research and development (R&D) should be downscaled (David et al., 2000). However, many studies also argue that public sector research is necessary for achieving large societal gains (Archibugi and Filippetti, 2018). In practice, the public sector’s innovation as a fraction of GDP has been shrinking over time in most OECD countries: the share of gross expenditure on R&D by governments in OECD declined from 44% in 1981 to 28% in 2013 (Archibugi and Filippetti, 2018). However, there is limited knowledge about the associated impact on the development of different types of novel technologies, long-term economic growth, and social welfare (Conceiçao et al., 2004).

Conclusions

     This study examines patent trends in environmental technologies, decomposed into four determinants in six major innovative countries, and highlights the differences between innovation in the public and private sectors of the economy. The development of environmentally sustainable technologies is important for the mitigation of climate change and other environmental issues. Understanding the roles of the public and private sectors is necessary to construct meaningful research policy and environmental policy that supports the development of new environmental technologies. This paper contributes to the literature on eco-innovation and expands on the role of public sector innovation.

     The findings indicate that, at an aggregate level, and contrary to what is usually expected in the literature, the main difference between the public and private sector drivers of environmental innovation is efficiency. The public sector has increased the number of patent applications in relation to R&D expenditure, whereas the opposite has occurred in the private sector, implying that public R&D has become relatively more efficient. It is also clear that R&D has shifted in focus and that environmental R&D is increasing, generating more patents over the study period as a whole. Disaggregating into different technological topics, the private and public R&D priorities seem to be moving in the same directions with more energy-related research. We also observe that, for technologies that have a higher potential for generating external social benefits, e.g., agriculture, the public sector has maintained a positive patent growth, whereas in the private sector, a priority shift has occurred to more energy-related technologies. The priority shift was large enough to negatively influence agriculture and forestry patent growth in the private sector.