Ecological modernisation and the creation of lead markets

Abstract

The paper will discuss the potential role of lead markets in the global process of ecological modernisation, here conceived as innovation and diffusion of environmental friendly technologies, including the innovation and diffusion of supporting national policies. This includes the question whether and how national pioneer roles in environmental policy can be played in times of economic globalisation. Global Environmental Change in the direction of sustainability strongly depends on international markets for environmental friendly technologies. Such markets need national "lead markets" as a starting point. A lead market is the country that adopts an innovation that subsequently adopted worldwide (Beise 2001). Lead markets are empirically characterised by high per-capita income, demanding and innovative buyers, high quality standards, political pressure for change and flexible, innovation- friendly framework conditions for producers and users. Unlike lead markets for normal technical innovations, environment-friendly technologies are specific insofar as they are problem-oriented and depend strongly on political influences. The problem dimension constitutes a potential global demand in terms of global environmental needs. It is mainly the role of pioneer countries to stimulate both, environmental innovation and their global diffusion, often in cooperation with international institutions and organisations. The interplay of innovation and diffusion of technology and policy takes place in different forms (from technology forcing to technology- based policies). It is the high income countries which are able to afford the necessary investments in R&D; for the development of new technologies. Many of them have also the demand conditions that enable environmental lead markets. These markets have to deal with the teething troubles of innovations, and they have to provide the pay back of R&D; investments. They demonstrate the feasibility of technologies on a large scale application. Lead markets are not only related to potential first mover advantages, they also can attract foreign investors for environmental friendly technologies. The paper is explorative in nature, as there is a lack of research on the mechanism and conditions for the successful making of global markets for environmental innovations. It should be understood as an overview and systematisation of aspects of global ecological modernisation with special regard to lead markets for environmental innovations.