Is participation in global value chains a blessing or a curse for green total factor productivity in Belt and Road initiative countries?

Abstract

With the continuous expansion of the "Belt and Road" (BRI), green total factor productivity (GTFP) has developed into consensus. Participation in Global value chains (GVCs) brings significant industrial and ecological benefits to BRI economies. By combining the multi-region input-output analyses with the panel regression model, the current paper examines the GVCs' influence on GTFP in 93 BRI countries during 2002–2018. Furthermore, the mediating effect model recognizes the impact mechanism of GVCs. The results showed that the GVCs position caused the GTFP to increase by 33%, as evidenced by the common correlated effects mean group (CEMG) estimator. Considering the GVCs’ participation modes heterogeneity, the increase in forward GVCs participation raises the GTFP by 20%, while the backward GVCs participation causes the GTFP to decrease by 17%. Considering the national heterogeneity, the GVC position increases GTFP in high-income, upper-middle-income, and lower-middle-income countries. Forward and backward participation have mixed results. Regarding the meditating effect model, the GVCs position and forward participation increase GTFP by increasing technology development and technical efficiency, while for backward participation, the effect is negative. BRI economies need to seek breakthroughs in GVC positions to attain the environmental governance function, enhance climate governance cooperation, and encourage synergy to promote green production.