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Global value chains, technological progress, and environmental pollution: Inequality towards developing countries.

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Area of Science:

  • Environmental Economics
  • International Trade
  • Technological Progress

Background:

  • Global value chains (GVC) participation boosts developing economies' GDP but can cause environmental pollution.
  • Technological progress is key to mitigating pollution, yet its dual effect with GVC participation needs study.
  • Existing research often overlooks the interconnectedness of GVC, technological progress, and environmental pollution.

Purpose of the Study:

  • To investigate the complex relationship between GVC participation, technological progress, and environmental pollution in developing nations.
  • To identify strategies for developing countries to achieve green development and emission reductions within GVCs.
  • To provide policy recommendations for sustainable integration into global value chains.

Main Methods:

  • Utilized the World Input-Output Database (WIOD) for empirical analysis.
  • Applied Wang's method for GVC embedding to assess input-output, energy use, labor, and pollution data.
  • Examined five developing countries: Brazil, Russia, India, China, and Mexico, analyzing industry-level data.

Main Results:

  • A significant value chain threshold effect was identified in developing countries.
  • Below this threshold, technological progress correlated with increased pollution.
  • Above the threshold, technological progress was linked to reduced emissions and environmental improvement.

Conclusions:

  • Developing countries can achieve green development and emission reductions by strategically managing their GVC participation.
  • Policy interventions are crucial to leverage technological progress for environmental benefits within GVCs.
  • Data limitations (1995-2009) present challenges for comprehensive analysis.