The Causality between Participation in GVCs, Renewable Energy Consumption and CO 2 Emissions

Using the panel vector autoregressive (PVAR) model accompanied by the system-generalized method of moment (System-GMM) approach, this paper investigates the dynamic causality between participation in global value chains (GVCs), renewable energy consumption and carbon dioxide (CO 2 ) emissions throughout 1990–2015 for 172 countries. The results show that participation in GVCs negatively causes renewable energy consumption except for the Middle East and North America (MENA) and sub-Saharan Africa. Second, except for the Asia–Pacific region and globally, participation in GVCs has no causal impact on CO 2 emissions, and participation in GVCs has a positive effect on CO 2 emissions in the Asia–Pacific region and globally. Third, except for globally and sub-Saharan Africa, CO 2 emissions have no causal impact on participation in GVCs; however, CO 2 emissions hurt participation in GVCs globally and in the sub-Saharan African region. Forth, renewable energy consumption positively causes participation in GVCs in MENA, while renewable energy consumption does not cause participation in GVCs globally and in other regions. Fifth, there is no causality between CO 2 emissions and renewable energy consumption both at the global and regional levels. Several policy implications are proposed and discussed for promoting participation in GVCs and improving the environment.