The impact of global value chain participation on CO2 emissions: new evidence based on the nonlinear PSTR model

The expansion of global value chains has fundamentally transformed international production patterns and their associated carbon emissions. This study investigates the nonlinear relationships between GVC participation and CO₂ emissions by employing panel smooth transition regression models for 63 countries over the period 2000 to 2018. The analysis identifies three distinct transmission mechanisms, namely scale, structural, and technological channels, with each mechanism exhibiting specific threshold dynamics. The results reveal that structural effects contribute to emission reductions when the industrial share remains below 0.266, whereas scale effects intensify emissions once export intensity surpasses 0.429. The technological channel shows a sharp decline in its emission-increasing effect once TFP exceeds 0.820. Notably, the high-TFP effect is smaller (0.017) but still present, indicating that technological advancement alone cannot fully offset the emission-increasing effect of GVC participation. The heterogeneity analysis uncovers substantial cross-country disparities in these relationships. OECD economies achieve emission reductions at lower industrial and technological thresholds, whereas non-OECD countries exhibit emission coefficients approximately five times higher under intensified scale effects, with technological upgrading merely neutralizing rather than reversing their emission-increasing effects. These findings suggest that achieving emission reductions through GVC participation necessitates coordinated improvements in both technological capabilities and structural transformation, with non-OECD countries requiring substantially higher technological thresholds to compensate for their emission disadvantages within global production networks.