Do global value chains spread knowledge and pollution? evidence from EU regions

In this paper we investigate the relationship between participation in global value chains and the environment from a spatial perspective. By drawing on an original dataset on global value chain participation, emissions of nitrogen oxides and sulphur oxides, and green patents for European regions, we present novel evidence about the relationship between global value chains, green technologies and air pollution at the regional level. Our findings suggest that although participation in global value chains may lead to lower polluting emissions, this effect largely depends on the capacity of regions to exploit the green knowledge deriving from participation and on the specific form of participation. When European regions are integrated with backward linkages (i.e., importing inputs to produce exports) they record lower levels of air pollution; conversely, participation through forward linkages (i.e., exporting inputs for other places’ exports) leads to an increase in air pollution. Backward participation also come out to support the development of green technologies that mediate the effects of global value chains on the environment posited by the “Pollution Haven” hypothesis. Overall, the relationship between global value chains participation and air pollution will depend on the type of participation and on the capacity of territories to profit it for the development of green technologies.