In this paper we examine the effect of technology transfer from 24 developed countries on energy intensity of GDP, carbon intensity of energy use and labour productivity of 56 developing countries empirically. We model specific spillovers embodied in trade of capital goods (machinery and equipment) and find that the technological spillovers will lead to higher carbon emissions than if no spillovers occurred.

Technological spillovers can significantly improve energy efficiency of the destination countries, which is expected to lead to lower carbon emissions due to the energy saving bias of technology spillovers. Technological spillovers has positive effect on the GDP per labour. Such an increase in labour productivity is supposed to result in greater carbon emissions due to output expanding effect of spillovers. Technological spillovers mediated through trade is found to improve carbon efficiency of the destination countries. Besides, inward FDI is proved to be an effective channel in lowering carbon intensity of energy use.

In sum, the emission-increasing influences of trade mediated spillovers due to higher labour productivity significantly outweighs the emission-reducing influences of technology transfer due to higher energy efficiency.

Key words: International technology transfer; CO2 emissions; energy efficiency; growth effect