The impact of global value chains on climate change

Climate change can be defined as the increase in average temperatures due to rising greenhouse gas (GHG) emissions, predominantly due to human activities. Carbon emissions have increased at an alarming rate with the emergence of globalization, with its accompanying global value chain, and the consequent increase in global production volume with its polluting sectors. To combat this alarming situation, production with environmentally friendly technologies has emerged recently, and developing countries are embracing more and more costly environmentally friendly production techniques, although they are disadvantaged when it comes to covering the costs. However, it has been observed that they stay behind in this race to adopt environmentally friendly techniques compared to developed countries. The aim of the study, which is a novel contribution to the existing literature, is to examine the relationship between the global value chain and climate change by considering the distinction between developed and developing countries. The study used the data of 156 countries from the years 2000–2018. The results obtained from the generalized method of moments (GMM) show that participation in global value chains has different effects in developed and developing countries regarding carbon emissions. When the level of participation in GVC (global value chain) and FVA (foreign value added) increases, countries’ carbon emissions decrease, and it increases when the DVA (domestic value added) level increases. As a result, in particular, developing countries should green their production methods, and for this purpose, financial support mechanisms should be established.