Pollution haven or pollution halo? The role of global value chains in Belt and Road economies

Muhammad Uzair Ali and Ying Wang

Review of Development Economics, 2024, vol. 28, issue 1, 168-189

Abstract: “Global value chains” (GVCs) participation brings countless economic and environmental benefits to “Belt and Road Initiative” (BRI) economies. As the nations associated with BRI are crucial members of GVCs, analyzing the influence of GVCs on environmental quality in BRI economies is of great significance. By joining regression models with “multi‐region input–output” analyses, current study inspects the influence of GVCs on environmental quality in 82 BRI economies from 2002 to 2018. This study considered different GVCs participation modes and national heterogeneity to check “pollution haven hypothesis and pollution halo hypothesis” theories. The GVC position worsened environmental quality in the full BRI panel and validated the pollution haven hypothesis theory. Forward and backward participation improves environmental quality and confirms the pollution halo hypothesis. Moreover, income‐specific outcomes showed divergent patterns related to GVCs and environmental quality. GVCs' position of GVCs promotes the environmental quality of developed and emerging countries and exacerbates that of developing and underdeveloped economies. Moreover, the links of forward and backward participation with environmental quality showed mixed results for the pollution haven and halo theories in all subpanels. The results propose that the BRI should focus on upgrading GVCs and adopting region‐specific green policies to ensure a sustainable environment.

Date: 2024
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