Global value chains and carbon emission reduction in developing countries: Does industrial upgrading matter?

Industrial upgrading and international collaboration in production have a vital impact on climate change globally. However, few studies have investigated the potential transmission role of industrial upgrading in the effect of participating in global value chains (GVCs) on carbon emissions. This study combines the value-added accounting method under the new trade accounting framework with the multi-regional input-output (MRIO) model to recalculate the real emissions embodied in trade for developing countries and investigate the relationships among GVC participation, industrial upgrading, and embodied emissions in different groups of countries identified using the fuzzy C-means clustering method. The empirical results show that the transforming and upgrading of industrial structure when participating in GVCs is conducive to easing the expansion of pollution emissions in developing countries such as Russia and Brazil, but the adjustment effect is relatively weak. The industrial structures of developing countries such as China and India face the dilemma of "low-end locking" when participating in GVCs, intensifying pressure on reducing carbon emissions domestically. The governments should promote low-carbon structural reform, cultivate endogenous comparative advantages, and promote the transformation from low-end to high-end product processing to break the path dependence on low-end locking in GVCs. This study provides a reference for governments of developing countries to effectively participate in the division and cooperation of production, conduct industrial upgrading, and reduce pollution emissions.