Greening the belt and road: How GVCs revolutionize carbon intensity in participating countries?

Abstract

As a critical link between production and carbon transfers, Global value chains (GVCs) increasingly support the green industrial transformation in the Belt and Road Initiative (BRI) countries. Based on the theoretical analyses, this study estimates the impact of GVCs participation on carbon intensity using the panel data in 22 BRI countries of 40 industries during 2000–2019, it also distinguishes the effects of national-industrial-ownership heterogeneity and clarifies the influence paths. The main findings are: (1) The average carbon intensity level presents a downward trend, and the GVCs position improved gradually recently after a long term decline before 2014 in fluctuation. Both behave differently when distinguishing participants at the country-industry-ownership dimensions. (2) GVCs position has a robust and negative correlation with carbon intensity. (3) At the national scale, developing countries and Annex I countries in the Kyoto Protocol benefit more from GVCs position upgrading in carbon reduction. At the industrial level, increase in GVCs position has significant carbon mitigation effects on agriculture and manufacture (labor and capital intensive) industries, while not significant in service (technology intensive) industries. Considering firm ownership, domestic firms could realize more carbon reduction through GVCs position revolution, while it's not significant for multinational enterprises. (4) From mechanism analyses, the suppression of carbon intensity by GVC upgrading is mainly exerted through its impact on improving capital and labor efficiencies. Policy implications on carbon intensity reduction are finally suggested.