Global value chains participation and environmental pollution in developing countries: Does digitalization matter?

Abstract

The study analyses the effect of global value chains participation (GVCP) on CO₂ emissions and assesses whether digitalization technologies can enhance environmental quality. We use panel data estimation techniques for 112 developing countries over the period 1990–2018. Findings show that the GVCP contributes to environmental degradation. Other factors that increase environmental damage include FDI inflows, industrial value-added and electricity consumption. However, renewable energy consumption significantly reduces CO₂ emissions. Findings show that digitalization is an effective channel in reducing CO₂ emissions in the GVCP in developing countries. These findings have important policy implications in exploring the GVCP's development dynamics in upgrading opportunities from digital technologies to reduce environmental pollution and promote sustainable growth in developing economies.