Acquisition of Technological Capabilities through the Clean Development Mechanism: Some Quantitative Explorations

This paper investigates the impact of the Clean Development Mechanism (CDM) on technological capabilities of implementing firms in India using longitudinal data of 500 CDM and non CDM firms for the period 2001–2012. Technological capacity is a multi-dimensional concept. The present study measures it by three indicators, namely, R&D intensity, profitability, and total factor productivity. The analysis uses difference-in-difference techniques based on longitudinal data. The existing literature on CDM has a limited number of empirical studies that address technological capability building issues deeply. This study is the first of its kind that has mapped the United Nations Framework Convention on Climate Change (UNFCCC) data on CDM with the PROWESS database on Indian companies and applied quasi experimental techniques to analyse the impact of CDM on building technological capabilities of the hosting firms. The first draft of the report was presented at the SANDEE research workshop held in Kathmandu in December 2012.