Global Value Chains Embeddedness for the Energy Efficiency: A Panel Data Approach with Country-Level Decomposition

Abstract

This study examines the link between a firm’s energy efficiency and their participation in global value chains (GVCs). Both countries’ GVCs participation and positioning indices are designed to define the features of countries’ participation in global value chains. We begin with a theoretical approach of how GVC participation influences energy efficiency. The sample size of 54 nations from 2000 to 2019 is then investigated for empirical analysis using FE and 2SLS methods. The results show that the impact of countries’ participation in GVCs is unknown and the development of global value chains positioning increases the energy efficiency in selected countries. Further, it is found that the expansion of GVCs positioning index increases energy efficiency and the effect of forward GVCs positioning on energy efficiency is larger than the effect of backward GVCs positioning. Furthermore, increasing GVC participation in wealthy nations reduces the energy efficiency of the manufacturing industries, but increasing GVC participation in developing countries raises the energy efficiency of manufacturing industries, somewhat opposing the pollution haven approach. A key policy recommendation is that countries actively participate in GVCs to encourage energy efficiency at the macro-level.