Heterogeneous impacts of GVCs participation on CO2 intensity: Evidence from developed and developing countries/regions

Abstract

The deepening of global value chains (GVCs) has made remarkable impacts on the environmental outcomes of all countries/regions. What are the differences in environmental burden undertaken by countries/regions at different stages of economic development are a question worthy inquiry. This study compares the impacts of GVCs participation degree on CO2 intensity between developed and developing countries/regions. Using panel data of 19 manufacturing industries in 43 countries/regions over the period of 2000–2014, it is discovered that the deeper participation in GVCs of developed countries/regions significantly reduces their CO2 intensity, while the more participation in GVCs of developing countries/regions significantly increases their CO2 intensity. Additionally, the quantile regression results reveal that the reduction of CO2 intensity is increasing for industries with higher initial CO2 intensity for developed countries/regions, whereas for developing countries/regions, only industries with initial low CO2 intensity experience significant increases in CO2 intensity. We further analyzed the effect of GVCs participation degree on CO2 intensity for high-tech and low-tech industries and discovered that the effect is only significant in low-tech industries. These findings provide empirical evidence for the pollution haven hypothesis and offer enlightenment to formulate future trade and environmental policies.

Keywords

• Global value chains participation
• CO2 intensity
• Pollution haven hypothesis
• Manufacturing industries