This study examines how participation in the global value chain (GVC) influences carbon dioxide (CO2) emissions in India from 1995 to 2020. It distinguishes between forward and backward GVC participation and reconceptualises scale, composition and technique effects as moderating mechanisms shaping the environmental consequences of GVC integration.
The study employs an autoregressive distributed lag (ARDL) cointegration framework using annual time-series data for India. Interaction terms capture the conditional effects of scale, composition and technique channels on the relationship between GVC participation and CO2 emissions. Robustness is assessed using fully modified ordinary least squares (FMOLS), dynamic ordinary least squares (DOLS) and standard diagnostic and stability tests.
The results reveal asymmetric environmental impacts of GVC integration. Forward participation is significantly associated with higher CO2 emissions, whereas backward participation is associated with lower emissions in the long run. Technique effects are associated with a weaker emission-increasing impact of forward participation and a stronger emission-reducing effect of backward participation. In contrast, composition effects are associated with higher emissions and partially offset the environmental gains from backward integration.
This study contributes to the trade–environment literature by modelling scale, composition and technique effects as conditioning mechanisms rather than independent outcomes. It provides new time-series evidence on the asymmetric environmental impacts of forward and backward GVC participation in a major emerging economy.
