Does a value-added smile curve imply an environmental frown curve?

Wolfgang Schwarzbauer, Virág Bittó, Philipp Koch and Jonathan Steininger

No 29, Research Papers from EcoAustria – Institute for Economic Research

Abstract: Global value chains (GVCs) play a crucial role in today's international trade. High value-added activities tend to cluster at the start and the end of GVCs, resulting in a U-shaped relationship across production steps known as the "smile curve". The distribution of CO2 emissions along the value chain, however, is relatively unexplored. Here, we map embodied CO2 emissions in GVCs to test whether emissions are distributed differently across production stages than value-added. We find that activities with high high emissions per unit of labour compensation cluster at early stages (e.g. energy production, mining), while late stages (e.g. retail trade) exhibit lower emission intensities. This results in a downward-sloping emissions curve with tentative evidence of a frown-curve pattern. We explore several examples at different levels of aggregation and provide an interactive platform to explore the mapping of value-added and emissions across GVCs.

Keywords: Greenhouse gas emissions; Sustainable Development; Transition towards green economy; Global Value Chains; Multi-Regional Input-Output Model; International Trade; Climate change (search for similar items in EconPapers)
JEL-codes: C67 F18 F62 F63 F64 Q56 (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-ene, nep-env and nep-int
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ecoarp:306347

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