On the Drivers of Clean Production: Firms' Global Value Chain Positioning — Finn Ole Semrau

Sprecher

Finn Ole Semrau (Kiel Institute)

Abstract

Industries occupying upstream positions in global value chains emit proportionately more CO2. But firms are heterogeneous even in narrowly defined industries. I empirically investigate if the negative relation between upstreamness and clean production, the latter measured as direct energy consumption and CO2 emissions in absolute and relative terms, holds at the firm-level. Using granular data of Indian manufacturing firms, I confirm the industry pattern in different specifications and the use of a 2-SLS instrumental variable approach - using advertisement expenditures over sales among firms producing a similar main product as an instrument. Notably, exposure to stringent market-related environmental policy in export destination markets negatively moderates the relation between upstreamness and dirty production, linking to the importance of regulation-push, demand-pull and learning-by-exporting for dirty producers in upstream position, characterised by a higher distance to the technology frontier.

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