IDEAS home Printed from https://ideas.repec.org/a/eee/appene/v307y2022ics0306261921014859.html
   My bibliography  Save this article

Reevaluation of the carbon emissions embodied in global value chains based on an inter-country input-output model with multinational enterprises

Author

Listed:
  • Zhu, Kunfu
  • Guo, Xuefan
  • Zhang, Zengkai

Abstract

Multinational enterprises actively participate in global production networks. However, the current global value chain accounting framework fails to consider the emissions originating from the production activities of multinational enterprises in the host country and may underestimate the carbon emissions embodied in global value chain activities. This paper proposed an Inter-Country Input-Output decomposition framework that can distinguish domestic firms and multinational enterprises and recalculated global value chain emissions including emissions embodied in international trade (trade-related GVC emissions), foreign direct investment (FDI-related GVC emissions), and both (trade and FDI related GVC emissions). We found that 1) the carbon emissions originating from global value chain activities were underestimated by about 13.8 percentage points under the original framework in 2016, and a large part was classified as emissions stemming from pure domestic production activities; 2) the FDI-related GVC emissions were notable in high-income economies and high-tech manufacturing sectors; 3) foreign direct investment mainly drove the emissions of upstream domestic firms through the joint domestic production linkage between domestic firms and multinational enterprises, especially in upper-middle-income countries; 4) from 2005 to 2016, the FDI-related GVC emissions increased by approximately 704.6 million tons, which was mainly attributed to the scale effect, whereas the carbon intensity effect caused a reduction. The results of this study exhibit a potential significance for the correct identification of the environmental impacts of global production fragmentation, and support policy decisions on national emission responsibilities and quotas determination, differentiated foreign investment decisions, and cleaner production development.

Suggested Citation

  • Zhu, Kunfu & Guo, Xuefan & Zhang, Zengkai, 2022. "Reevaluation of the carbon emissions embodied in global value chains based on an inter-country input-output model with multinational enterprises," Applied Energy, Elsevier, vol. 307(C).
    • Handle: RePEc:eee:appene:v:307:y:2022:i:c:s0306261921014859
    DOI: 10.1016/j.apenergy.2021.118220
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0306261921014859
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.apenergy.2021.118220?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Meng, Bo & Wang, Jianguo & Andrew, Robbie & Xiao, Hao & Xue, Jinjun & Peters, Glen P., 2017. "Spatial spillover effects in determining China's regional CO2 emissions growth: 2007–2010," Energy Economics, Elsevier, vol. 63(C), pages 161-173.
    2. Robert Koopman & Zhi Wang & Shang-Jin Wei, 2014. "Tracing Value-Added and Double Counting in Gross Exports," American Economic Review, American Economic Association, vol. 104(2), pages 459-494, February.
    3. Bo Meng & Yong Fang & Jiemin Guo & Yaxiong Zhang, 2017. "Measuring China’s domestic production networks through Trade in Value-added perspectives," Economic Systems Research, Taylor & Francis Journals, vol. 29(1), pages 48-65, January.
    4. Charles Cadestin & Koen De Backer & Sébastien Miroudot & Laurent Moussiegt & Davide Rigo & Ming Ye, 2019. "Multinational enterprises in domestic value chains," OECD Science, Technology and Industry Policy Papers 63, OECD Publishing.
    5. James R. Markusen & Yiqing Xie, 2014. "Outsourcing versus vertical integration: Ethier–Markusen meets the property-rights approach," International Journal of Economic Theory, The International Society for Economic Theory, vol. 10(1), pages 75-90, March.
    6. Robert Hoffmann & Chew-Ging Lee & Bala Ramasamy & Matthew Yeung, 2005. "FDI and pollution: a granger causality test using panel data," Journal of International Development, John Wiley & Sons, Ltd., vol. 17(3), pages 311-317.
    7. Meng, Bo & Ye, Ming, 2020. "Smile curves in global value chains: multinationals vs domestic firms; the U.S. vs China," IDE Discussion Papers 802, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    8. Charles Cadestin & Koen De Backer & Isabelle Desnoyers-James & Sébastien Miroudot & Ming Ye & Davide Rigo, 2018. "Multinational enterprises and global value chains: New Insights on the trade-investment nexus," OECD Science, Technology and Industry Working Papers 2018/05, OECD Publishing.
    9. Peters, Glen P., 2008. "From production-based to consumption-based national emission inventories," Ecological Economics, Elsevier, vol. 65(1), pages 13-23, March.
    10. Wiedmann, Thomas, 2009. "A review of recent multi-region input-output models used for consumption-based emission and resource accounting," Ecological Economics, Elsevier, vol. 69(2), pages 211-222, December.
    11. Bo Meng & Ming Ye & Shang‐Jin Wei, 2020. "Measuring Smile Curves in Global Value Chains," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 82(5), pages 988-1016, October.
    12. Zhang, Zengkai & Zhu, Kunfu & Hewings, Geoffrey J.D., 2017. "A multi-regional input–output analysis of the pollution haven hypothesis from the perspective of global production fragmentation," Energy Economics, Elsevier, vol. 64(C), pages 13-23.
    13. Meng, Bo & Peters, Glen P. & Wang, Zhi & Li, Meng, 2018. "Tracing CO2 emissions in global value chains," Energy Economics, Elsevier, vol. 73(C), pages 24-42.
    14. Duan, Yuwan & Jiang, Xuemei, 2021. "Pollution haven or pollution halo? A Re-evaluation on the role of multinational enterprises in global CO2 emissions," Energy Economics, Elsevier, vol. 97(C).
    15. Su, Bin & Ang, B.W., 2010. "Input-output analysis of CO2 emissions embodied in trade: The effects of spatial aggregation," Ecological Economics, Elsevier, vol. 70(1), pages 10-18, November.
    16. Hao Xiao & Bo Meng & Jiabai Ye & Shantong Li, 2020. "Are global value chains truly global?," Economic Systems Research, Taylor & Francis Journals, vol. 32(4), pages 540-564, October.
    17. Charles Cadestin & Koen De Backer & Isabelle Desnoyers-James & Sébastien Miroudot & Davide Rigo & Ming Ye, 2018. "Multinational enterprises and global value chains: the OECD analytical AMNE database," OECD Trade Policy Papers 211, OECD Publishing.
    18. Zengkai Zhang & Dabo Guan & Ran Wang & Jing Meng & Heran Zheng & Kunfu Zhu & Huibin Du, 2020. "Embodied carbon emissions in the supply chains of multinational enterprises," Nature Climate Change, Nature, vol. 10(12), pages 1096-1101, December.
    19. Babiker, Mustafa H., 2005. "Climate change policy, market structure, and carbon leakage," Journal of International Economics, Elsevier, vol. 65(2), pages 421-445, March.
    20. Andrea Andrenelli & Charles Cadestin & Koen De Backer & Sébastien Miroudot & Davide Rigo & Ming Ye, 2018. "Multinational production and trade in services," OECD Trade Policy Papers 212, OECD Publishing.
    21. Yan, Yunfeng & Wang, Ran & Zheng, Xiuxiu & Zhao, Zhongxiu, 2020. "Carbon endowment and trade-embodied carbon emissions in global value chains: Evidence from China," Applied Energy, Elsevier, vol. 277(C).
    22. Wiedmann, Thomas & Lenzen, Manfred & Turner, Karen & Barrett, John, 2007. "Examining the global environmental impact of regional consumption activities -- Part 2: Review of input-output models for the assessment of environmental impacts embodied in trade," Ecological Economics, Elsevier, vol. 61(1), pages 15-26, February.
    23. Hummels, David & Ishii, Jun & Yi, Kei-Mu, 2001. "The nature and growth of vertical specialization in world trade," Journal of International Economics, Elsevier, vol. 54(1), pages 75-96, June.
    24. Su, Bin & Ang, B.W., 2013. "Input–output analysis of CO2 emissions embodied in trade: Competitive versus non-competitive imports," Energy Policy, Elsevier, vol. 56(C), pages 83-87.
    25. Johnson, Robert C. & Noguera, Guillermo, 2012. "Accounting for intermediates: Production sharing and trade in value added," Journal of International Economics, Elsevier, vol. 86(2), pages 224-236.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Dimitropoulos, Panagiotis & Koronios, Konstantinos & Sakka, Georgia, 2023. "International business sustainability and global value chains: Synthesis, framework and research agenda," Journal of International Management, Elsevier, vol. 29(5).
    2. Zhou, Xi-Yin & Xu, Zhicheng & Zheng, Jialin & Zhou, Ya & Lei, Kun & Fu, Jiafeng & Khu, Soon-Thiam & Yang, Junfeng, 2023. "Internal spillover effect of carbon emission between transportation sectors and electricity generation sectors," Renewable Energy, Elsevier, vol. 208(C), pages 356-366.
    3. Yan, Yunfeng & Li, Xiyuan & Wang, Ran & Zhao, Zhongxiu & Jiao, Aodong, 2023. "Decomposing the carbon footprints of multinational enterprises along global value chains," Structural Change and Economic Dynamics, Elsevier, vol. 66(C), pages 13-28.
    4. Yong Shi & Anda Tang & Tongsheng Yao, 2022. "A Study on Inter-Provincial Environmental Pollution Movement in China Based on the Input–Output Method," Energies, MDPI, vol. 15(18), pages 1-19, September.
    5. Carballo, Jerónimo & Marra de Artiñano, Ignacio & Sztajerowska, Monika & Volpe Martincus, Christian, 2023. "How Do Investment Promotion Policies Affect Sustainability?," IDB Publications (Working Papers) 13306, Inter-American Development Bank.
    6. Ma, Ning & Sun, WenLi & Li, Huajiao & Zhou, Xing & Sun, Yihua & Ren, Bo, 2023. "Industrial linkage of global carbon emissions: A heterogeneous ownership perspective," Energy Policy, Elsevier, vol. 172(C).
    7. Weixin Yang & Hao Gao & Yunpeng Yang & Jiacheng Liao, 2022. "Embodied Carbon in China’s Export Trade: A Multi Region Input-Output Analysis," IJERPH, MDPI, vol. 19(7), pages 1-16, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Boya Zhang & Shukuan Bai & Yadong Ning & Tao Ding & Yan Zhang, 2020. "Emission Embodied in International Trade and Its Responsibility from the Perspective of Global Value Chain: Progress, Trends, and Challenges," Sustainability, MDPI, vol. 12(8), pages 1-26, April.
    2. Meng, Bo & Ye, Ming, 2022. "Smile curves in global value chains: Foreign- vs. domestic-owned firms; the U.S. vs. China," Structural Change and Economic Dynamics, Elsevier, vol. 60(C), pages 15-29.
    3. Xu, Xueliu & Wang, Qian & Ran, Chenyang & Mu, Mingjie, 2021. "Is burden responsibility more effective? A value-added method for tracing worldwide carbon emissions," Ecological Economics, Elsevier, vol. 181(C).
    4. Meng, Bo & Gao, Yuning & Ye, Jiabai & Zhang, Meichen & Xing, Yuqing, 2022. "Trade in factor income and the US-China trade balance," China Economic Review, Elsevier, vol. 73(C).
    5. Li, Meng & Meng, Bo & Gao, Yuning & Wang, Zhi & Zhang, Yaxiong & Sun, Yongping, 2022. "Tracing CO2 emissions in global value chains: Multinationals vs. domestically-owned firms," Sustainable Global Supply Chains Discussion Papers 2, Research Network Sustainable Global Supply Chains.
    6. Zhong, Zhangqi & Guo, Zhifang & Zhang, Jianwu, 2021. "Does the participation in global value chains promote interregional carbon emissions transferring via trade? Evidence from 39 major economies," Technological Forecasting and Social Change, Elsevier, vol. 169(C).
    7. Tsakanikas, Aggelos & Caloghirou, Yannis & Dimas, Petros & Stamopoulos, Dimitrios, 2022. "Intangibles, innovation, and sector specialization in global value chains: A case study on the EU's and the UK's manufacturing industries," Technological Forecasting and Social Change, Elsevier, vol. 177(C).
    8. Ding, Tao & Ning, Yadong & Zhang, Yan, 2018. "The contribution of China’s bilateral trade to global carbon emissions in the context of globalization," Structural Change and Economic Dynamics, Elsevier, vol. 46(C), pages 78-88.
    9. Yan, Yunfeng & Li, Xiyuan & Wang, Ran & Pan, An, 2023. "Global value chain and export-embodied carbon emissions: New evidence from foreign-invested enterprises," Economic Modelling, Elsevier, vol. 127(C).
    10. Yan, Bingqian & Xia, Yan & Jiang, Xuemei, 2023. "Carbon productivity and value-added generations: Regional heterogeneity along global value chain," Structural Change and Economic Dynamics, Elsevier, vol. 65(C), pages 111-125.
    11. Kaltenegger, Oliver & Löschel, Andreas & Pothen, Frank, 2017. "The effect of globalisation on energy footprints: Disentangling the links of global value chains," Energy Economics, Elsevier, vol. 68(S1), pages 148-168.
    12. Su, Bin & Ang, B.W., 2014. "Input–output analysis of CO2 emissions embodied in trade: A multi-region model for China," Applied Energy, Elsevier, vol. 114(C), pages 377-384.
    13. Zhang, Zengkai & Guo, Ju'e & Hewings, Geoffrey J.D., 2014. "The effects of direct trade within China on regional and national CO2 emissions," Energy Economics, Elsevier, vol. 46(C), pages 161-175.
    14. Wenzheng Liu & Yadong Ning & Shukuan Bai & Boya Zhang, 2023. "The Impact of Trade on Carbon Emissions and Employment from the Perspective of Global Value Chains—A Case Study of Chinese–Japanese–Korean Trade," Energies, MDPI, vol. 16(5), pages 1-23, March.
    15. Hongguang Liu & Xiaomei Fan, 2017. "Value-Added-Based Accounting of CO 2 Emissions: A Multi-Regional Input-Output Approach," Sustainability, MDPI, vol. 9(12), pages 1-18, December.
    16. Miroudot, Sébastien & ye, ming, 2018. "Tracing value-added and double counting in sales of foreign affiliates and domestic-owned companies," MPRA Paper 85723, University Library of Munich, Germany.
    17. Yan, Yunfeng & Wang, Ran & Chen, Sida & Wang, Feifan & Zhao, Zhongxiu, 2022. "Mapping carbon footprint along global value chains: A study based on firm heterogeneity in China," Structural Change and Economic Dynamics, Elsevier, vol. 61(C), pages 398-408.
    18. Ma, Ning & Sun, WenLi & Li, Huajiao & Zhou, Xing & Sun, Yihua & Ren, Bo, 2023. "Industrial linkage of global carbon emissions: A heterogeneous ownership perspective," Energy Policy, Elsevier, vol. 172(C).
    19. Jiansuo Pei & Bo Meng & Fei Wang & Jinjun Xue & Zhongxiu Zhao, 2018. "Production Sharing, Demand Spillovers And Co2 Emissions: The Case Of Chinese Regions In Global Value Chains," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 63(02), pages 275-293, March.
    20. Duan, Yuwan & Jiang, Xuemei, 2017. "Temporal Change of China's Pollution Terms of Trade and its Determinants," Ecological Economics, Elsevier, vol. 132(C), pages 31-44.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:appene:v:307:y:2022:i:c:s0306261921014859. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/405891/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.