Participation in Digital Global Value Chains Reduces Embodied Carbon Emissions in Digital Exports

The technological revolution and industrial transformation led by digital technologies are driving the shift from global value chains (GVCs) to digital global value chains (DGVCs). To address the challenge of global climate change while achieving economic growth, many countries are prioritizing practical energy-saving and emission reduction measures, while simultaneously seeking greater trade gains through participation in digital GVCs and the international division of labor. This study examines whether participation in DGVCs reduces carbon emissions. Using balanced panel data covering 62 countries from 2007 to 2021, we employ a Panel Smooth Transition Regression (PSTR) model to investigate the nonlinear relationship between DGVC participation and CO2 emissions embodied in digital exports (EEDE). The empirical results reveal an inverted U-shaped relationship, indicating that DGVC participation increases emissions below a digitalization threshold but reduces emissions beyond this threshold. These findings provide new evidence for the dual role of digitalization in shaping trade-related emissions and highlight the importance of stage-specific strategies. Policy implications emphasize that less-digitized economies must prioritize breaking free from carbon lock-in by pursuing green transformation alongside digital expansion. The study deepens the understanding of the trade–environment nexus in the digital era and provides actionable insights for aligning digital economic development with global climate goals.