Global value chains participation and environmental degradation in SAARC economies

The rapid rise in the globalization of production processes, knowledge spillovers, grave environmental concerns, and sustainable development goals have attracted researchers and policymakers to explore the causes and consequences of these transformations. The developing countries such as The South Asian Association for Regional Cooperation (SAARC) countries are considered highly vulnerable to climatic changes. The purpose of this study is to examine the impact of global value chains participation both at the aggregated and disaggregated level on CO2 emissions in selected SAARC countries. The relationship among the modeled variables is estimated through the random-effects and fixed-effects models by using the robust standard errors as proposed by Driscoll and Kraay (1998). The findings indicate that the global value chains participation is pollution-intensive. Moreover, it is found that the global financial crisis of 2008 led to a decline in CO2 emissions. However, the emergence of World Trade Organization (WTO) particularly after the Doha agreement of 2001 has a significant positive impact on CO2 emissions in these countries. Based upon the empirical findings, some policy suggestions are also provided.