Impacts of International Trade Integration on Emissions

Hang Nguyen and My Nguyen

Australian Economic Papers, 2026, vol. 65, issue 2, 105-116

Abstract: This study estimates how international trade integration, proxied by global value chain (GVC) participation, affects carbon emissions, addressing endogeneity with fixed effects and system GMM. We find that deeper GVC integration increases CO2 per capita, CO2 per GDP, emissions from electricity and heat production, and CO2 intensity. Disaggregation shows stronger emission effects for backward than forward participation. We also document nonlinearities: environmental impacts rise as countries become more deeply embedded in global production networks. Heterogeneity is salient: developing economies and energy‐intensive regions, especially East Asia and the Pacific, experience the largest increases. These results highlight the need for green trade policies, cleaner production technologies, and stronger environmental regulations to mitigate emissions while sustaining global trade. The study aligns with SDG 9 (industry, innovation, and infrastructure), SDG 12 (responsible consumption and production), and SDG 13 (climate action) by emphasizing the importance of low‐carbon industrialization and sustainable trade practices.

Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:bla:ausecp:v:65:y:2026:i:2:p:105-116

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