Greening Trade through Global Value Chains in Africa
Date
2025
Authors
Angella Faith Montfaucon
Socrates Kraido Majune
Journal Title
Journal ISSN
Volume Title
Publisher
AERC
Abstract
The global response to climate change necessitates that less developed economies adapt and maximize new potential export opportunities in global trade, and access green technology through imports for their own green transformation. Using detailed firm-level data for Malawi and Kenya (2013-2020), this paper tests whether firms in global value chains (GVCs) participate more in green trade relative to non GVC firms. Second, we test whether importing green goods leads to exporting green goods. Green goods are heterogeneous and are divided into 19 different categories, depending on their usage in climate mitigation and adaptation. We find that imports of green goods far exceed exports, signaling that trade currently serves more as an access to green technologies with limited exports of these products. Second, being a GVC firm is associated with a higher probability of importing than exporting green goods. Also, the increase in trade value after a firm becomes a GVC is much larger for imports than exports. Third, higher imports of green goods are associated with higher exports of green goods, especially for GVC firms. Therefore, GVCs can play a key role in Africa’s green transition and trade competitiveness. As such, it is imperative for African governments to attract foreign direct investment in the green sector, potentially targeting sectors where they can gradually acquire comparative advantage and start exporting green goods in the future.