Building a Green Future: The Impact of Global Value Chains and Economic Fitness on CO2 Emissions in BRICS Nations
Year: 2024
Type: article
Abstract: Climate change is a major challenge hindering economic efforts to maintain a balance between economic growth and the environment. BRICS economies, a group of five emerging nations, are major emitters of CO2 emissions that cause climate change. Their trade patterns and production structures also contribute to their CO2 emissions. Therefore, the current study analyzed the individual and synergistic impact of gross value chains (GVCs) and economic fitness (EF) on CO2 emissions in light of the Environmental Kuznets Curve (EKC) model. The data were cross-sectionally dependent and heterogeneous. Therefore, comprehensive econometric techniques, including panel-corrected standard error, feasible generalized least squares, and robust standard error methods, were applied to the panel of BRICS economies from 1995–2018. The findings of the study revealed i) the existence of the EKC hypothesis in BRICS economies; ii) the positive and significant individual impact of GVCs on CO2 emissions while holding the EKC hypothesis; iii) the negative and significant individual impact of EF on CO2 emissions; iv) the negative and significant synergistic impact of GVCs and EF (GVCs*EF) on CO2 emissions in the presence of the EKC hypothesis. The most effective incentive policies, such as tax reductions and financial awards, encourage the local industries involved in GVCs to lower their emissions. Moreover, retrofitting the existing production infrastructure must be executed to increase the economic fitness level of economies, which lowers the positive cause of GVC emissions by fostering the adoption of clean and energy-efficient technologies.
Authors: Tan Yang, Yanyan Zhang, Haiqing Hu, Pomi Shahbaz
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: diamond
OpenAlex ID: W4405417124