Who pays the environmental price of global integration? Evidence from CO2 emissions and GVC participation

This paper analyzed the effects of global value chain (GVC) participation on CO2 emissions in 61 countries over the period 2000–2018. The analysis allowed for heterogeneity across income groups, differences along the emissions distribution, and the presence of a structural break associated with the 2008 financial crisis. The results showed that GVC participation was associated with higher emissions, with larger effects in low- and lower-middle-income countries. At the quantile level, the estimated impact was stronger in the upper quantiles of the emissions distribution, indicating higher environmental pressure in more polluting economies. After 2008, average emissions declined, but the marginal emissions effect of GVC participation increased. The decomposition into forward and backward participation showed that both components were positively related to emissions, with forward participation driving most of the heterogeneity at higher emission levels. The findings were robust across alternative specifications and informed the discussion of policy responses related to regulation, clean investment, and trade governance.