Technology gap, global value chain and carbon intensity: Evidence from global manufacturing industries

Abstract

Abstract: The technological progress of a country may mean that its technology gap compared to the frontier has changed, which will induce a change in its positioning in the global value chain and affect its carbon intensity. Using paten data, Input Output Database and the Global Value Chain Index, we employ systematic Generalized Method of Moments, quantile regression with panel data and multilevel mediation analysis to measure empirically the impact of the technology gap on carbon intensity and positioning on the global value chain. The empirical analysis shows that narrowing the technology gap will reduce significantly a country's carbon intensity. Further, the effect of the technology gap on carbon intensity is more pronounced on industries with higher carbon intensity. The mechanism test using the mediation effect model proves that the impact of the technology gap on carbon intensity is achieved by changing in the position of global value chain. The findings suggest that a country's carbon intensity performance is not only affected by its own technological progress, but also by global frontiers. Therefore, a country should not only pay attention to its own technological progress but also to the development of global frontier technologies and speed of technological progress.