Dynamics between participation in global value chains and carbon dioxide emissions: empirical evidence for selected Asian countries.

Abstract

While the relationship between carbon dioxide (CO2) emission and its determinants has been widely examined in Asia, little attention has been paid to the role played by the participation in global value chains (GVCs). Thus, this study aims to fill this research gap by investigating the relationship between participation in GVCs and CO2 emissions in eleven Asian countries along with economic growth, energy consumption, trade openness, and population density. The study covers the period 1995q1-2014q4 and employs both fully modified ordinary least square (FMOLS) and dynamic ordinary least square (DOLS) methods, as well as cointegration and causality tests to examine the dynamics between variables. The findings indicate a cointegration relationship between the variables. Moreover, both FMOLS and DOLS results show that higher participation in global value chains leads to a reduction of CO2 emissions, while economic growth and energy consumption increase CO2 emissions. The outcomes also indicate a negative relationship between trade openness and CO2 emissions. Thus, the selected Asian countries should promote policies aimed at enhancing their participation in global value chains and expanding their openness to trade. Besides, the selected countries are expected to implement energy-saving policies and promote cleaner sources of energy.