Does Global Value Chain Embedment Contribute to Environmental Pollution in Emerging Economies?

Abstract

Scientifically judging the environmental effects of embedding in the global value chain (GVC) has important theoretical significance and practical value, especially for emerging economies, but there are few studies on the relationship between GVC embedment and environmental pollution in emerging economies. Based on the classical theory of Grossman, this study analyzed the mechanism framework of GVC embedment on environmental pollution and then used the panel data of 16 emerging economies from 1998 to 2019 for empirical tests. After using the FGLS regression model and a series of empirical tests, the main conclusions are as follows. (1) The impact of GVC embedment on environmental pollution in emerging economies includes five effects. The scale effect brings about the expansion of production activities and increases the emission of environmental pollutants. The technological effect refers to improvements in the level of clean technology, which are brought about by the acquisition and acceptance of “technology spillover” in the value chain. The structural effect is the reduction in pollutant emissions and improvement in the environment through economic upgrading. The income effect is a “demand push” to improve the environment and reduce pollution triggered by an increase in national income. The lock-in effect means that the leaders of the value chain hinder emerging economies from achieving high-level economic upgrades, intending to lock them into the links with relatively high pollution. These effects are not static but are interlinked and affect each other. (2) The results of the empirical study show that embedding in the GVC initially has a negative impact on the environment, but with the deepening of GVC embedment, environmental pollution will decrease; that is, it shows an inverted U-shaped relationship. (3) The density of energy use, the share of fossil fuels, and the per capita income of emerging economies are positively correlated with environmental pollution, while population density and manufacturing share are negatively correlated. This study also provides suggestions on how to improve the environment in the process of GVC embedment in the future.