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Does a value-added smile curve imply an environmental frown curve?

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  • Schwarzbauer, Wolfgang
  • Bittó, Virág
  • Koch, Philipp
  • Steininger, Jonathan

Abstract

Global value chains (GVCs) play a crucial role in today's international trade. High value-added activities tend to cluster at the start and the end of GVCs, resulting in a U-shaped relationship across production steps known as the "smile curve". The distribution of CO2 emissions along the value chain, however, is relatively unexplored. Here, we map embodied CO2 emissions in GVCs to test whether emissions are distributed differently across production stages than value-added. We find that activities with high high emissions per unit of labour compensation cluster at early stages (e.g. energy production, mining), while late stages (e.g. retail trade) exhibit lower emission intensities. This results in a downward-sloping emissions curve with tentative evidence of a frown-curve pattern. We explore several examples at different levels of aggregation and provide an interactive platform to explore the mapping of value-added and emissions across GVCs.

Suggested Citation

  • Schwarzbauer, Wolfgang & Bittó, Virág & Koch, Philipp & Steininger, Jonathan, 2024. "Does a value-added smile curve imply an environmental frown curve?," Research Papers 29, EcoAustria – Institute for Economic Research.
    • Handle: RePEc:zbw:ecoarp:306347
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    References listed on IDEAS

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    JEL classification:

    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • F18 - International Economics - - Trade - - - Trade and Environment
    • F62 - International Economics - - Economic Impacts of Globalization - - - Macroeconomic Impacts
    • F63 - International Economics - - Economic Impacts of Globalization - - - Economic Development
    • F64 - International Economics - - Economic Impacts of Globalization - - - Environment
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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