Understanding the implications of global value chain participation on ecological sustainability in emerging economies

Abstract The environmental economics literature has documented several factors influencing ecological sustainability, albeit with divergent findings. However, the literature has largely overlooked the effects of global value chain (GVC) participation on the load capacity factor (LCF), which captures both the supply and demand dimensions of ecological sustainability. This study provides an updated perspective using estimates from quantile-on-quantile kernel regularized least-squares and wavelet KRLS within the context of the emerging economies. These novel estimators account for time, quantile, and frequency dimensions in the analyzed relationship, thereby enhancing policy options. Using a quarterly dataset (1990Q1–2018Q4), the estimators reveal heterogeneous implications of GVC participation on LCF across countries. The observed heterogeneity underscores country-specific nuances essential for policy formulation. Specifically, GVC–LCF relationships are predominantly positive in Brazil, China, India, South Africa, and Nigeria. Conversely, in Russia, Mexico, and Turkey, the associations remain largely neutral, with isolated adverse and weakly positive correlations. Additionally, these relationships vary across the short, medium, and long terms, reflecting the scale, composition, and technique effects in most countries. The varying nature of these associations highlights the need for policy interventions tailored to country-specific dynamics and evolving economic conditions. Evidently, these recommendations are fundamental for enhancing ecological sustainability in emerging economies.