LAUSR

ABSTRACT This study assesses the impact of the Clean Development Mechanism (CDM) on the transfer of clean technology in India. The reason this study is unique is because firstly, it adopts an outcome-oriented approach to define ‘technology transfer’, which means that technology transfer occurs if firms are able to upgrade their ‘dynamic capabilities’. It uses three indicators of firms’ dynamic capabilities: R&D expenditures to sales ratio, fuel consumption to sales ratio and total factor productivity growth. Secondly, it moves away from the analysis of technology transfer claims made in either Project Development Documents or primary surveys to using actual information on firms’ performance for the analysis. The empirical analysis is based on a difference-in-difference design. It draws on the balance sheet data of 612 firms from India between 2001 and 2012 from the PROWESS database. The results reveal that CDM has the potential of laying a foundation for capability building in developing countries but in its current form, it is not effective.