Global value chain participation and CO2 emissions: Does economic growth matter? New evidence from dynamic panel threshold regression

Abstract

This study investigates the impact of Global Value Chains (GVCs) participation on CO2 emissions in 61 economies using OECD data from 2000 to 2018. It focuses on the multiple regime effects of segregated participation in GVCs on CO2 emissions and employs a threshold model to estimate this impact. The findings indicate that GVCs participation in developing economies leads to higher CO2 emissions, while it has negative impact on higher-growing economies. Moreover, the study reveals that the direction of participation in GVCs matters, as forward participation has varying effects on CO2 emissions. Specifically, backward participation reduces CO2 emissions in both developing and developed economies. These results suggest that policymakers and industry leaders need to adopt a more nuanced approach to managing the environmental impacts of GVCs. They can do this by promoting domestic industries that investing in environmentally friendly technologies and processes for lower and higher-growth economies.