Will Global Value Chain Participation Reduce Environment Emissions? Evidence from Firm-Level Data of China

The global value chain (GVC) had brought different pattern to the environment impact of trade. Thus, exploring the effect of participation in GVCs on firms’ environment al performance is of great significance. Using micro data on Chinese industrial firms between 2000–2013, we investigate the firms’ participation in GVCs and the degree of vertical specialization onto their sulfur dioxide (SO 2 ) emission intensity. The results showed that firms’ deeper participation in GVCs and the higher degree of vertical integration are conducive to decrease SO 2 emission intensity through the channels of productivity, imported intermediate inputs, coal-use efficiency and R&D expenditure. Besides, the propensity score matching and difference-in-differences methods are used to mitigate the endogeneity problem together with a series of heterogeneity tests. This study contributes to the literature on the effect of trade by providing firm-level evidence from China