The interaction effects of GVC involvement and domestic R&D on carbon emissions: evidence from China’s industrial sectors

Abstract

ABSTRACT In the context of China’s integration into global value chains (GVCs) and construction of lower-carbon economy, this study examines the effects of two different types of GVC involvement (i.e. GVC participation and GVC position) and domestic research and development (R&D) on carbon emissions, simultaneously and interactively. Using the panel data of 17 industrial sectors in China from 2005 to 2015, which were identified by merging the Organisation for Economic Cooperation and Development (OECD) industries and China’s National Economy Industries, we estimate GVC participation and GVC position. We then test the interaction effects of GVC involvement and R&D on carbon emissions, applying the extended Stochastic Impacts by Regression on Population, Affluence, and Technology (STIRPAT) model and feasible generalised least squares (FGLS) method. The results reveal that both GVC involvement and R&D have negative effects on carbon emissions. Moreover, the complementary effect occurs between GVC participation and R&D, while the substitution effect occurs between GVC position and R&D.