Comparative Green Advantage: Growth Regimes and Public Investment in Renewable Energy R&D

• Published date: 01 January 2024
• Author: Daniel Driscoll
• Date: 01 January 2024
• DOI: http://doi.org/10.1111/jcms.13485

Comparative Green Advantage: Growth Regimes and Public

Investment in Renewable Energy R&D

DANIEL DRISCOLL

The Watson Institute for International and Public Affairs, Brown University, Providence

Abstract

Many consider research and development (R&D) a crucial pillar of decarbonization, yet few have

investigated what actually drives investment. What drives public investment in renewable energy

R&D in wealthy democracies? Using OECD data, this research note tests a number of hypotheses

from the literature and finds that public investment in renewable energy R&D is most closely as-

sociated with growth regimes and their related characteristics. Furthermore, the ‘most invested’are

dynamic services export-led growth regimes who are deindustrializing and moving towards

knowledge-based sectors like information and communications technology and finance. In short,

economies investing the most in renewable energy R&D have the least structurally

carbon-intensive growth regime. As international economic integration locks many countries into

specific path-dependent roles, these findings suggest that there is a comparative advantage to the

green transition. It concludes with a discussion of the asymmetric green capacities between core

and periphery countries in the European Union.

Keywords: comparative advantage; growth models; growth regimes; public investment; renewable

energy; research and development

Introduction

The importance of public investment in renewable energy research and development

(R&D) for decarbonization is well known (Hanna and Victor, 2021; Mazzucato, 2013;

Nahm, 2021). It has the potential to accelerate energy innovation and technological dis-

covery, whilst displacing fossil fuels. Investment in renewable energy can also guard

against ‘disorderly shifts’in the energy transition that, according to the new Bank for In-

ternational Settlements annual report, hold significant short-term and long-term costs for

economies that further delay decarbonization (BIS, 2022). What drives public investment

in renewable energy R&D in wealthy democracies? The literature has yet to answer this

question.

After refuting several common hypotheses from the literature, I find that public invest-

ment in renewable energy R&D is driven by the character of national growth regimes.

Export-led growth regimes invest the most, especially the dynamic services export-led

growth regimes of Nordic countries and the Netherlands. What explains their compara-

tively high performance? Dynamic services export-led growth regimes which are

deindustrializing and moving towards knowledge-based sectors like information and

communications technology (ICT) services and finance. This means that the policies to

structurally support their growth regime require less and less attention towards fossil fuels

and carbon-intensive manufacturing. Growth regimes and models are, of course, interde-

pendent and asymmetric (Baccaro et al., 2022; Bürgisser and Di Carlo, 2022). As

JCMS 2024 Volume 62. Number 1. pp. 285–294 DOI: 10.1111/jcms.13485

© 2023 University Association for Contemporary European Studies and John Wiley & Sons Ltd.