Global value chains, technological progress, and environmental pollution: Inequality towards developing countries

Abstract

The production and trade activities of global value chains (GVC) increasingly contribute to the gross domestic product (GDP) of developing countries. However, while the development of domestic economies brings about technological progress, it also may have negative consequences such as environmental pollution. Technological progress can be conducive to reducing pollution emissions. Our motive is to realize the dual effects of technological progress and energy saving and emission reduction in developing countries' participation in the global value chain through research on GVC, technological progress and environmental pollution. Improving environmental quality through technological advances and reducing the adverse effects of inequality in trade status, enabling developing countries to obtain dividends from participating in the value chain as much as possible, and mitigating the adverse effects of environmental pollution during development. And lay the policy foundation for developing countries to go green. However, most of the current researches focus on the relationship between GVC and technological progress or GVC and environmental pollution, and the research on the relationship between the three is scarce. We use the WIOD database to try to find the relationship between developing country global value chain participation, technological progress and environmental pollution. Wang's method for GVC embedding is adopted for empirical research on input and output, energy utilization, high-skilled labor ratio, and pollution emissions in five typical developing countries, namely, Brazil, Russia, India, China, and Mexico. The relationships among the degree of participation in GVC, technological progress, and environmental pollution is studied from the perspective of industries in each country. The outcomes indicate that there is a value chain threshold in developing countries. When the degree of participation in a value chain is lower than the threshold, technological progress can result in an increase in pollution; otherwise, technological progress can reduce emissions. These results provide a theoretical basis and practical suggestions for developing countries to realize their own energy conservation, emission reductions, and green development while participating in globalized value chains. However, because the data related to the WIOD database is limited to 1995–2009, there are a few flaws in data integrity, which is also a challenge we face.