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On the Drivers of Clean Production: Firms' Global Value Chain Positioning

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  • Semrau, Finn Ole

Abstract

Industries that occupy upstream positions in global value chains (GVCs) - being positioned closer to the raw product - produce proportionately more CO2-intensive. However, firms are heterogeneous, even in narrowly defined industries. In this paper, I empirically investigate whether the relationship between upstreamness and CO2 emissions, measured in absolute and relative terms, holds within industries at the firm level. Using granular data of Indian manufacturing firms and controlling for established drivers of clean production, I reveal that firms producing products closer to final consumption produce less CO2-intensive. I corroborate the finding by using a 2-SLS instrumental variable approach. Interestingly, I find that exposure to importing countries with stringent environmental policies attenuates the link between upstreamness and dirty production. The latter finding suggests the imperative of technology upgrading for dirty upstream producers aiming to remain competitive in international markets.

Suggested Citation

  • Semrau, Finn Ole, 2022. "On the Drivers of Clean Production: Firms' Global Value Chain Positioning," VfS Annual Conference 2022 (Basel): Big Data in Economics 264178, Verein für Socialpolitik / German Economic Association.
    • Handle: RePEc:zbw:vfsc22:264178
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    References listed on IDEAS

    as
    1. Marcel P. Timmer & Erik Dietzenbacher & Bart Los & Robert Stehrer & Gaaitzen J. Vries, 2015. "An Illustrated User Guide to the World Input–Output Database: the Case of Global Automotive Production," Review of International Economics, Wiley Blackwell, vol. 23(3), pages 575-605, August.
    2. Costa-Campi, María Teresa & García-Quevedo, José & Segarra, Agustí, 2015. "Energy efficiency determinants: An empirical analysis of Spanish innovative firms," Energy Policy, Elsevier, vol. 83(C), pages 229-239.
    3. Kesidou, Effie & Demirel, Pelin, 2012. "On the drivers of eco-innovations: Empirical evidence from the UK," Research Policy, Elsevier, vol. 41(5), pages 862-870.
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    More about this item

    Keywords

    Environment and trade; environment and development; CO2 intensity; global value chains; sustainable development;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F18 - International Economics - - Trade - - - Trade and Environment
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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