Global Value Chains Participation and Environmental Pollution in Developing Countries: Does Digitalization Matter?
Date
2022-07
Authors
Ali, Essossinam
Bataka, Hodabalo
Awade, Nadege Essossolim
Journal Title
Journal ISSN
Volume Title
Publisher
African Economic Research Consortium
Abstract
This study analyses the effect of Global Value Chains participation (GVCPs) on
environmental pollution. It also assesses whether the use of digitalization can mitigate
the effect of GVCPs on environmental pollution. We employed the second-generation
panel analysis on data from 112 developing countries over the period from 1990 to
2018. Using Driscoll and Kraay estimation technique, we find that the GVCPs increases
environmental pollution while digitalization reduces CO2 emissions in developing
countries. However, the results show that the U-inverted hypothesis between GVCPs
and environmental pollution is not verified in the study areas. Furthermore, the
study shows that, unlike renewable energy consumption, the FDI inflows, industrial
value-added, and electricity consumption are positively correlated to environmental
pollution in developing countries. We find that, reducing CO2 emissions from
digitalization is more pronounced in other developing countries than in sub-Saharan
Africa. Moreover, the findings show that digitalization can be used as an effective
channel in reducing the effects of GVCPs on environmental pollution and helping
developing countries to go green. These findings have important policy implications
in exploring the GVCPs development dynamics in terms of upgrading opportunities
in using digital technologies to reduce environmental pollution and promote green
technologies' adoption for structural transformation of developing countries.
Description
Keywords
Global value chains; Digitalization; CO2 emissions; Developing countries.