CO2 emissions and global value chains indicators:new evidence for 1995–2018

Abstract

Globalization and the configuration of production processes around Global Value Chains (GVCs) have become key factors for explaining the recent evolution of environmental and economic indicators. Indeed, previous research found evidence on the significant impact of GVCs indicators (participation and position) on CO2 emissions. Additionally, results obtained in previous literature vary depending on the time period and geographical areas considered. In this context, the main aims of this paper are to analyze the role the GVCs in explaining the evolution of CO2 emissions, and to identify possible structural breaks. This study uses the Multiregional Input-Output framework to calculate a position indicator and two different measures of participation in GVCs (interpreted either as trade openness or international competitiveness). The analysis useS Inter-Country Input-Output tables (ICIO) as main database, which includes 66 countries and 45 industries and covers the period 1995–2018. It is first concluded that upstream positions in GVCs are associated to lower global emissions. Additionally, the effect of participation depends on the measure used: trade openness is linked to lower emissions, while a higher competitiveness in international trade leads to higher emissions. Finally, two structural breaks are identified in 2002 and 2008, revealing that position is significant in the two first subperiods, while participation becomes significant from 2002 onwards. Thus, policies to mitigate CO2 emissions might to be different before and after 2008: currently, reductions in emissions can be achieved by increasing value-added embodied in trade while decreasing the volume of transactions.