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Global Warming and Economic Convergence: the Role of Technological Diffusion*

This paper addresses carbon emissions negotiation between rich and poor countries considering two supranational agents: the OECD and the non-OECD. The results are based on a neoclassical growth model with exogenous technical progress, with different technological diffusion patterns, and with a set of geophysical relationships that consider the environmental externality linked to CO2 emissions (the cost-benefit framework). The negotiation outcome seems to be highly dependent not only on the economic convergence hypotheses between the developing and developed regions, but also on the size of the negotiating partners in terms of carbon emissions . Faster economic growth would induce more incentives for the non-OECD countries first, to mitigate carbon emissions and, second, to negotiate joint carbon emissions abatement policies. Furthermore, the possibilities of free riding decrease as large regions are the main actors involved in the negotiations. Moreover, this paper shows that for developing nations there are few differences in terms of percent emissions abatement between a cooperative policy with the OECD nations and the selfish nationalistic solution. These signs apparently confirm the hypothesis that many of the clues for the solution of the global warming issue are under the control of non-OECD countries.