Developing countries are increasing their share of global trade in green technologies, products that reduce pollution, cut greenhouse gas emissions, and help communities adapt to severe weather, according to a new report from the International Finance Corporation (IFC). The report highlights how falling costs and advances in areas like renewable energy are helping lower- and middle-income countries catch up with richer nations, creating promising chances for investors and policymakers to support further growth.
Demand for cleaner, more efficient technologies is reshaping global markets. Over the past 15 years, exports of new energy and climate resilience products have grown 30% faster than general exports. Today, green goods make up at least 10% of global exports, with their value chains adding another 20%. This shift, driven by cheaper renewables, better energy storage, and rising need to adapt to extreme weather, is changing long-standing business models and giving new companies room to grow.
While wealthier countries still lead in green exports, the report finds that developing economies have steadily improved their position in the last two decades. These countries also show strength in early stages of the innovation process—scientific research and patenting—especially in areas like green energy and climate adaptation. About 12% of innovations in these countries are green-related, compared to 8.5% in high-income nations. Local needs, resources, and fewer old systems may help explain this edge.
The report notes that green innovation in developing countries is often high quality, receiving many citations indicating strong knowledge sharing. However, inventors may hold back investment because others also benefit from their ideas. Financial limits further slow innovation, pointing to a clear need for more investment and supportive policies. Strengthening universities and research centers could also raise local innovation levels and help translate ideas into commercial success.
Ultimately, the report challenges the idea that developing countries should mainly adopt existing technologies. It shows many have skilled innovators creating homegrown solutions that benefit both themselves and global markets. Supporting these innovators with funding and programs can boost growth worldwide. To guide investors and governments, IFC plans to release online tools that highlight the best opportunities by country and technology.
