The Intra-EU Value Chain: An Approach to Its Economic Dimension and Environmental Impact

economies
A icle
The In a-EU Value Chain: An App oach o I s Economic
Dimension and En i onmen al Impac
Ósca Rodil-Ma zábal * and Hugo Campos-Rome o


Ci a ion: Rodil-Ma zábal, Ósca , and
Hugo Campos-Rome o. 2021. The
In a-EU Value Chain: An App oach
o I s Economic Dimension and
En i onmen al Impac . Economies 9:
54. h ps://doi.o g/
10.3390/economies9020054
Academic Edi o : Ral Fendel
Recei ed: 20 Feb ua y 2021
Accep ed: 31 Ma ch 2021
Published: 7 Ap il 2021
Publishe ’s No e: MDPI s ays neu al
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Copy igh : © 2021 by he au ho s.
Licensee MDPI, Basel, Swi ze land.
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A ibu ion (CC BY) license (h ps://
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4.0/).
ICEDE Resea ch G oup, Depa amen o de Economía Aplicada, Uni e sidade de San iago de Compos ela,
P aza do Ob adoi o, 0, 15705 San iago de Compos ela, A Co uña, Spain; hugo.campos. ome [email p o ec ed]
*Co espondence: osca [email p o ec ed]
Abs ac :
This pape aims o analyze he economic dimension and en i onmen al impac o in a-
EU alue-added gene a ion linked o global alue chains (GVCs) h ough inpu -ou pu analysis.
Fo his pu pose, in o ma ion has been collec ed om TiVA (T ade in Value Added, OECD) and
Eo a da abases o he yea s 2005 and 2015. F om an economic pe spec i e, he esul s poin o
a s eng hening o he alue-added gene a ed wi hin Fac o y Eu ope. F om an en i onmen al
pe spec i e, all EU28 membe s ha e educed hei expo s- ela ed impac s in in ensi y-emissions
e ms, bu no all o hem in he same deg ee. An app oach o he en i onmen al Kuzne s cu e
(EKC) has also been ca ied ou h ough a panel da a model. The esul s show a posi i e impac o
he pa icipa ion in in a-EU alue chain (Fac o y Eu ope) on CO
2
emissions pe capi a. Fu he , an
in e ed U-shaped cu e o CO
2
emissions is ound o he pe iod 2005–15. In his sense, Eu opean
economies wi h lowe de elopmen le els (many Eas e n and Sou he n coun ies) seem o be s ill
on he ising segmen o he cu e, while he mo e de eloped ones seem o be on he dec easing
segmen . These esul s highligh he need o design global moni o ing and p e en ion mechanisms
o ackle g owing en i onmen al challenges and he need o inco po a e speci ic ac ions associa ed
wi h he GVCs ac i i y.
Keywo ds:
EU28; in a-EU ade; global alue chains; en i onmen al impac ; Fac o y Eu ope;
en i onmen al Kuzne s cu e; pollu ion ha en hypo hesis; ci cula economy
1. In oduc ion
Th oughou he wo ld, socie y is inc easingly awa e o en i onmen al p oblems and
he need o adop changes leading o a mo e sus ainable way o li e. In esponse o his need,
go e nmen s ha e implemen ed a ious measu es o add ess en i onmen al issues. On a
global scale, he Uni ed Na ions ag eed in 2015 on a plan o p og ess owa ds 17 sus ainable
de elopmen goals (SDGs), unde he 2030 Agenda o Sus ainable De elopmen . In his
espec , he en i onmen al dimension is p esen in se e al o hese SDG a ge s.
Fu he mo e, he Eu opean Union (EU) is p omo ing he so-called ci cula economy
(CE) s a egy wi h he aim o minimising he gene a ion o was e and making he bes use
o he a ailable esou ces. In ac , since 2015 a ious CE measu es ha e been p oposed and
implemen ed. Howe e , none o hem men ions he impac o in e na ional agmen a ion
o p oduc ion on he en i onmen despi e he ele ance o p oduc ion linkages wi hin he
so-called Fac o y Eu ope, especially be ween EU membe s. Indeed, i is no ewo hy ha in
he EU in eg a ion p ocess in a- egional ade lows ha e always been much mo e in ense
han he ex a- egional ones.
Conce ning in e na ional economy, he ole o global alue chains (GVCs) is pa icu-
la ly ele an as a way o o ganising p oduc ion p ocesses, no only by agmen ing hem
in o di e en s ages, bu also by loca ing hese s ages in di e en coun ies. Howe e ,
as Baldwin (2006,2012) sugges s, he e m “global” is ela i e since many o hese alue
chains end o ha e a s ong egional o ien a ion.
Economies 2021,9, 54. h ps://doi.o g/10.3390/economies9020054 h ps://www.mdpi.com/jou nal/economies
Economies 2021,9, 54 2 o 17
Acco ding o his au ho , he e a e h ee la ge comme cial egions in he Wo ld, namely
Fac o y Eu ope, Fac o y Asia, and Fac o y Ame ica. Among hese, Fac o y Eu ope is he
mos in ensi e in e ms o in a- egional ade. In his ega d, EU enla gemen s ha e
usually been accompanied no only by an in ensi ica ion o in a-EU ade bu also by
p ocesses o in a-EU indus ial eloca ion, as in he las 15 yea s wi h he Cen al and
Eas e n Eu opean Coun ies (CEECs) (F i sch and Ma hes 2017). I should be no ed ha
while ex a-EU expo s o goods and se ices accoun ed o mo e han 14% o global
expo s in 2019, in a-EU expo s accoun ed o mo e han 17% (Da a ex ac ed om he
Wo ld T ade O ganiza ion da abase).
Fu he mo e, pa icipa ion in GVC also gene a es inno a ion p ocesses due o he
need o being compe i i e in in e na ional ma ke s. A po en ial inno a ion pa hway ela ed
o GVCs is he so-called en i onmen al upg ading, which is de ined as any imp o emen
implemen ed by a i m ha educes i s emissions and ene gy consump ion.
The e o e, i is necessa y o include he en i onmen al e ec s o in a-EU alue c e-
a ion p ocesses ela ed o GVCs pa icipa ion in policies o ien ed o he p omo ion o he
CE. This would allow a be e assessmen o hese p og ammes and he conside a ion o
measu es o educe he impac o ade on he en i onmen . In his sense, he inpu –ou pu
(IO) me hodology is use ul o analyzing he en i onmen al impac o ade.
The aim o his pape is o analyze he economic dimension and en i onmen al impac
o he in a-EU alue-added linked o GVCs by using an IO app oach ( alue-added ade
pe spec i e). This app oach ocuses on he in a-EU alue chain linked o bo h ex a-EU
and in a-EU expo s. In his espec , he main esea ch subjec is wo old. Fi s ly, o
analyze he changes in he EU28 agmen a ion o p oduc ion, wi h a special ocus on he
Cen al and Eas e n Eu opean enla gemen . He e, he unde lying hypo hesis conce ns he
economic dimension and he e olu ion o he in a-EU alue chain. In his sense, he pape
aims o es whe he his egional alue chain has s eng hened in he analyzed pe iod
(2005–15), when he in eg a ion o Eas e n Eu opean coun ies ook place.
Secondly, he pape aims o analyze he en i onmen al impac associa ed wi h he
in a-EU alue-added c ea ion p ocesses along he egional alue chain (Fac o y Eu ope).
He e, he unde lying hypo hesis conce ns he di e ences be ween he economic dimension
(economic de elopmen ; alue-added expo s) and en i onmen al impac (CO
2
emissions)
o he in a-EU alue chain pa icipa ion o Eu opean coun ies. In his espec , he pa-
pe aims o e i y he exis ence o asymme ies be ween hese wo pe spec i es in iew
o some heo e ical app oaches, p o iding new insigh s and e idence o he economy-
en i onmen link.
In his sense, he main no el y o his pape is o b ing a double pe spec i e o he
s udy o he en i onmen al impac o in a-EU ade lows. Fi s , i ocuses on alue-
added lows linked o he in a-EU agmen a ion o p oduc ion h ough he analysis o
o wa d GVC pa icipa ion. Second, i add esses he analysis o emissions associa ed wi h
in a- egional lows in an ad anced con ex o economic in eg a ion.
In o de o add ess hese issues, an analysis o in a-EU alue-added gene a ion om
a GVC app oach ( o wa d GVC pa icipa ion) is ca ied ou using IO me hodology wi h
en i onmen al ex ension o he yea s 2005 and 2015. The selec ion o he yea 2005 is
jus i ied by he ac ha mos CEECs joined he EU om 2004 onwa ds. In addi ion, a
panel da a es ima ion is pe o med in o de o e i y he ul ilmen o he en i onmen al
Kuzne s cu e hypo hesis. The s a is ical in o ma ion used comes om Eo a26 da abase, a
mul i egional IO (MRIO) model ha includes 186 coun ies and 26 homogeneous sec o s
o all o hem. Mo eo e , TiVA (T ade in Value Added, and O ganiza ion o Economic
Co-ope a ion and De elopmen (OECD)) da abase is used o add ess speci ic ade issues
in e ms o alue-added. Da a collec ed a he Wo ld Bank (popula ion, and GDP de la o )
ha e also been used.
The pape is s uc u ed as ollows: Sec ion 2in oduces he main heo e ical aspec s
ela ed o GVCs and i s en i onmen al impac . Sec ion 3p esen s he me hodology ame-
Economies 2021,9, 54 3 o 17
wo k employed in his pape , based on IO analysis. Sec ion 4p esen s and discusses he
main esul s. Finally, Sec ion 5o e s some conclusions and possible u u e esea ch.
2. Li e a u e Re iew
Ea ly wo k on he analysis o in e na ional lows and he en i onmen was cha ac-
e ized by s a ic analyses o he impac o ade on he en i onmen as well as he impac
o en i onmen al policies on ade pe o mance. This app oach has led o unce ain and
di e gen esul s. In his line, some au ho s ha e ound ha he adop ion o en i onmen al
p o ec ion policies wo sens ade pe o mance due o compe i i eness losses. Acco ding
o hese indings, he e seems o be a ade-o be ween ade and en i onmen al gains
(Siebe 1974
,1977). Fo example, he ecen s udy by Fang e al. (2019) inds ha China’s
egions wi h igh e en i onmen al egula ions ha e educed hei expo dynamism.
Howe e , o he p oposals show opposi e esul s by using al e na i e assump ions.
Fo example, Pe hig (1976) no es ha specializa ion in emission-in ensi e goods can esul
in wel a e losses and ha he adop ion o en i onmen al p o ec ion measu es can lead o
s eng hening a coun y compa a i e ad an age. In u n, S a opoulos e al. (2018) ind
an in e ed U-shaped ela ionship be ween he igidi y o en i onmen al egula ion and
indus ial compe i i eness, sugges ing ha he linkage be ween en i onmen al egula ion
and ade pe o mance is complex and non-linea .
Ansa i and Khan (2021) analyze he impac o ade openness on en i onmen al quali y
(in e ms o he ecological oo p in ) in a se o Asian coun ies be ween 1991 and 2016. The
au ho s a emp o di e en ia e he h ee classic e ec s conside ed in he ade-en i onmen
binomial: scale, echnical and composi ion e ec s. On he one hand, he esul s e i y ha
he scale e ec , e e ed o he olume o ade, de e io a es en i onmen al quali y. On he
o he hand, he echnical and composi ion e ec s, e e ed o he p oduc ion echnology
used, and he p oduc s manu ac u ed, espec i ely, educe en i onmen al de e io a ion.
These esul s a e in line wi h he wo k o An weile e al. (2001) and
Chou and Wang
(2020), among o he s.
La e heo ies such as he pollu ion ha en hypo hesis (PHH) o he en i onmen al
Kuzne s cu e (EKC) became inc easingly ele an . On he one hand, he PHH es ablishes
ha in he p esence o in e na ional dispa i ies in en i onmen al egula ions and in he
p esence o ee mo emen o capi als, indus ies a ec ed by igh en i onmen al egula ion
will eloca e hei en i onmen ally ha m ul ac i i ies o coun ies wi h so e en i onmen al
s anda ds. As wi h he ea ly wo k on he ade–en i onmen nexus, some au ho s ound
e idence ha holds his hypo hesis (Low and Yea s 1992;Lucas e al. 1992), while o he s
poin ed ou ha in e na ional di e ences in en i onmen al egula ion a e no de e minan
o eloca ion (Dean 1992;G ossman and K uege 1991).
Despi e hese disc epancies, PHH is s ill he subjec o much ecen esea ch. Some o
hese s udies e i y he ul ilmen o his hypo hesis unde ce ain condi ions o o speci ic
sec o s ha a e pa icula ly sensi i e o en i onmen al egula ions, such as elec onic
equipmen (Copeland and Taylo 2004;Kellenbe g 2009).
Rega dless o whe he he o sho ing decision is based on less es ic i e en i onmen-
al egula ion, he o e all impac on he en i onmen is he one s a ed by he PHH (Guzel
and Okumus 2020;Zhao e al. 2020). Manu ac u ing asks gene ally end o eloca e o
de eloping coun ies, which a he same ime end o ha e lowe en i onmen al cons ain s
han de eloped coun ies. As a esul , new p oduce s a e unlikely o adop he same
en i onmen al and eco-design p ac ices applied in he coun y o o igin.
The en i onmen al damage esul ing om ade is pa icula ly ele an in hose ac i -
i ies ha a e ex emely agmen ed and o ganized h ough he so-called GVCs, ex ensi e
in e na ional ne wo ks ha in ol e he pa icipa ion o se e al agen s loca ed in di e en
coun ies o he manu ac u e o a p oduc (A nd and Kie zkowski 2001;Ge e i 2005,
2014). These la ge p oduc ion ne wo ks in ol e la ge mo emen s o goods, inc easing
he en i onmen al impac o ade in wo ways: p oduc ion in coun ies wi h weake
Economies 2021,9, 54 4 o 17
en i onmen al egula ion (en i onmen ally ha m ul p oduc ion) and inc easing lows o
in e na ional anspo , which in ol e emissions and ma e ials use.
On he o he hand, he EKC s a es ha as a coun y de elops i s impac on he en i-
onmen inc eases up o a ce ain le el o GDP pe capi a, om which u he de elopmen
will educe en i onmen al deg ada ion. As wi h he PHH, some s udies e i y (Jalil and
Mahmud 2009) while o he s a e less conclusi e abou he ul ilmen o he EKC (Ahmed
e al. 2016;Des ek e al. 2018;Kleemann and Abdulai 2013).
I should be no ed ha no all p oduc ion eloca ion p ocesses ake place om de el-
oped coun ies o Asia o o he de eloping a eas. The in eg a ion o Eas e n Eu opean
economies in o he EU since 2004 has a o ed he eloca ion o ce ain ac i i ies om he
Cen al Eu opean economies o he new Membe S a es. Howe e , his eloca ion has aken
place mo e as ou sou cing p ocesses han h ough he es ablishmen o subsidia ies (Ma in
2006). Mo eo e , acco ding o Geishecke (2006), mos o he asks ini ially o sho ed o
Eas e n Eu ope a e labo -in ensi e, al hough mo e se ice- ela ed asks ha e also s a ed
o be eloca ed (Sass and Fi eko a 2011).
The wo k by Mand as and Salo i (2020) analyzes he po en ial e ec s o he e en ual
in eg a ion o he Balkan coun ies in o he EU om an economic poin o iew. These
au ho s ind ha in eg a ion has posi i e e ec s, bu une en ac oss sec o s. Pa icula ly
no ewo hy is he po en ial ou come de i ed om pa icipa ion in GVCs achie ed h ough
in eg a ion in o he Union. This in eg a ion would mainly bene i pa icipa ion in he
egional chain o Fac o y Eu ope. Howe e , hese au ho s do no add ess issues a ising
om he possible eloca ion o p oduc ion p ocesses as a consequence o his in eg a ion.
Acco ding o he PHH, since he ea ly yea s o Eas e n Eu opean economies’ in e-
g a ion in o he EU o he ha moniza ion o hei en i onmen al s anda ds (Despi e he
numbe o membe coun ies, he e ha e been no ele an cases o non-compliance con-
ce ning Eu opean en i onmen al egula ion. Acco ding o Bö zel and Buzogány (2019),
he success in he ha moniza ion o en i onmen al legisla ion is mainly due o wo ac o s.
On he one hand, o he s a egy b oadly ollowed by Eu opean ins i u ions o ensu e
compliance wi h he Eu opean common egula ion. On he o he hand, en i onmen al
policy is no pa icula ly igo ous a he EU le el and seeks o modi y he legisla ion o each
membe s a e o a oid in a-EU i egula i ies), i could be expec ed a wo se en i onmen al
pe o mance o hese coun ies compa ed o he es o he EU. A he same ime, acco ding
o he EKC, hei ade in eg a ion in o he EU should a o highe g ow h a es among
Eas e n Eu opean coun ies. Assuming ha due o hei low de elopmen wi hin he EU
con ex hey a e s ill in he ising sec ion o he EKC, an inc ease in emissions gene a ed by
hese coun ies may be expec ed as a esul o hei in eg a ion in o he EU.
In his sense, he wo k by Pablo-Rome o e al. (2017) inds an in e ed U-shaped
cu e—as es ablished by he EKC— o he anspo sec o , which accoun s o a ound a
qua e o o al emissions. Fu he mo e, hese au ho s also s a e ha he in lexion poin has
no ye been eached. The s udy by Lei ão and Balogh (2020), ocused on he ag icul u al
sec o , also inds ha he highe g ow h and p oduc i i y a es in he sec o lead o mo e
en i onmen al conce ns. The wo k by Al-Mulali e al. (2015) ob ains in e es ing esul s
by inding a posi i e ela ionship be ween GDP g ow h and CO
2
emissions, while inding
a ela ionship o opposi e sign be ween ade openness and emissions. Howe e , i a
highe deg ee o ade openness induces highe inc eases in GDP, ollowing his a ionale
in e na ional ade would gene a e an inc ease in emissions h ough inc eases in GDP.
Shahbaz e al. (2019) es ima e he ul ilmen o he EKC hypo hesis in Vie nam.
Fi s , hey e i y ha ac o s such as ene gy consump ion, economic s uc u e, FDI and
u baniza ion posi i ely in luence CO
2
e olu ion. Rega ding EKC compliance, he s udy
is non-de e minis ic, inding an N-shaped e olu ion in long- e m p ojec ions o CO
2
emissions as a unc ion o economic g ow h. The au ho s conclude ha , since economic
g ow h causes an inc ease in CO
2
emissions, he adop ion o clean echnologies should be
conside ed by he go e nmen as a p e en i e policy measu e.
Economies 2021,9, 54 5 o 17
Rega ding he Eas e n Eu opean economies, he e is a lack o li e a u e analyzing
whe he his egion has become a so o pollu ion ha en wi hin he EU. F om his sca ce
li e a u e i is no possible o d aw an unequi ocal conclusion on his issue. Fo example,
Ma ínez-Za zoso e al. (2017) a emp s o analyze he ela ionship be ween he le el
o s ingency o en i onmen al egula ion and in a-EU ade lows, hei esul s ha dly
suppo he PHH.
Howe e , o he s udies poin o opposi e conclusions. In his sense, Bagaye and
Locha d (2017) ind ha as EU membe s a es ad ance in en i onmen al egula ion, hey
also inc ease hei impo s o emission-in ensi e goods om bo h, Asia and eme ging
Eu opean coun ies. These au ho s also highligh he in ensi e use o ossil uels in hese
egions: mo e es ic i e en i onmen al egula ion in some e i o ies appea s o gene a e
g ea e en i onmen al impac s in o he s, hinde ing en i onmen al imp o emen on a global
scale. This esul aises ques ions abou he need o global coo dina ion mechanisms o
e ec i ely achie e a sus ainable u u e.
The esea ch conduc ed by Tsagka i e al. (2018) analyzes he link be ween he apid
economic g ow h o he Polish coun y ollowing i s ade opening and Eu opean in eg a-
ion p ocess and he en i onmen al e ec s linked o hese p ocesses. Thei esul s poin
ou o a signi ican inc ease in CO
2
emissions di ec ly linked o he p ocesses o in eg a ion
and ade libe aliza ion.
Ho and Iyke (2019) analyze he ela ionship be ween ade openness and i s e ec s
on CO
2
emissions o a se o Cen al and Eas e n Eu opean coun ies. Thei esul s a e
consis en wi h he EKC since hey ind a nega i e ela ionship be ween emissions and
ade openness—which is linked o economic g ow h—in he long e m. These au ho s
also poin ou ha he e is a limi o he educ ion o en i onmen al impac s om ade
openness and he e o e, beyond a ce ain poin , he posi i e e ec s could be e e sed.
This pape aims o con ibu e o ill he gap in he li e a u e by analyzing he en i on-
men al impac o in a-EU p oduc ion linkages in a con ex o economic in eg a ion and
in e na ional agmen a ion o p oduc ion. In his sense, i seeks o answe he esea ch
ques ion o whe he he in eg a ion o EU economies, especially in he case o Eas e n
Eu opean coun ies, has led o changes in he en i onmen al impac (measu ed in CO
2
emissions) o hei in a-EU linkages (measu ed in ade in alue-added).
3. Da a, Me hods, and Model Speci ica ion
The IO amewo k in oduced by Leon ie (1937,1951) allows he analysis o he
in e sec o al ela ions o an economy. Cu en ly, he e a e some IO p ojec s o ien ed o
he analysis o in e na ional ade, especially use ul o analyzing ade in alue-added, o
g ea u ili y in he GVC amewo k. The IO ables de eloped o his pu pose include no
only in e sec o al linkages wi hin an economy, bu also hose o each domes ic sec o wi h
each o eign sec o . These analy ical ools a e gene ally en i led MRIO models (Lenzen
e al. 2012,2013;Timme e al. 2015).
The da a o his pape we e collec ed om wo open-access sou ces. On he one hand,
in o ma ion conce ning he alue-added gene a ion a he in a-EU le el was ob ained
om TiVA da abase de eloped by he OECD. The speci ic in o ma ion o he analysis o
p oduc ion chains was ob ained by ope a ing on he basis o he “ o wa d pa icipa ion
in GVCs” indica o o he Eu opean le el (This indica o p o ides he alue-added ha
has been gene a ed in an EU28 coun y (coun y A) and subsequen ly ans o med and
expo ed by ano he membe coun y (coun y B) o ano he EU o non-EU coun y (coun y
C), exp essed as a pe cen age o o al g oss expo s by coun y A. This is a measu e o he
complex p oduc ion linkages wi hin he EU28 egional alue chain. The p oduc o his
indica o by he o al g oss expo s esul s in he o wa d pa icipa ion as an expo low).
On he o he hand, he da a o he en i onmen al analysis o in a-EU p oduc ion
linkages comes om he MRIO da abase Eo a26—an open access da abase o esea che s.
Eo a26 p o ides a se o ha monized MRIO ables o 190 coun ies and 26 sec o s o he
pe iod 1990–2015. The e is a se o sa elli e accoun s accompanying he economic accoun s,

Economies 2021,9, 54 6 o 17
which p o ide in o ma ion on sec o al emissions o each economy. In his wo k, CO
2
emissions ha e been selec ed due o he in o ma ion a ailabili y o all Eu opean coun ies.
In acco dance wi h s a is ical a ailabili y, he pe iod selec ed o he analysis is om 2005
o 2015— he las yea a ailable in Eo a.
In he ollowing, he ma hema ical p ocedu e o he calcula ion o he o wa d pa -
icipa ion om he MRIO amewo k, measu ed no as a pe cen age, bu as an expo
low o alue-added, is p esen ed. The p ocedu e o he ans o ma ion o expo lows
measu ed in mone a y e ms in o ade lows measu ed in CO
2
emissions is also p o ided.
As he analysis is ca ied ou a a coun y le el, he sec o al dimension is excluded in he
o mula ion.
Fo a se o
c
coun ies,
Tc×c
is de ined as he in e media e ansac ions ma ix,
Fc×c
as he inal demand ma ix, and
Xc×1
as he o al ou pu ec o . The basic IO en i ies a e
as ollows:
X=Ti +Fi;A=Tˆ
X−1;L=(I−A)−1(1)
whe e
i
is a uni y ec o used o pe o m he ow o column sums equi ed (In case a
ow-wise sum is equi ed,
i
will be o
c×
1 dimension while in case a column-wise sum is
equi ed,
i
will be o 1
×c
dimension).
Ac×c
ep esen s he echnical p oduc ion coe icien s
ma ix and
ˆ
X−1
c×c
is a ma ix whose diagonal con ains he elemen s o he o al ou pu
ec o ; he emaining elemen s a e null—all elemen s wi h a ci cum lex accen ep esen
he diagonaliza ion o he o iginal ec o . Finally,
Lc×c
ep esen s he Leon ie in e se
ma ix and Ic×c he iden i y ma ix.
Following Koopman e al. (2014), i is possible o ob ain he o al ou pu by b eaking
down each elemen acco ding o whe e i is ac ually abso bed:
X∗=LF (2)
whe e
X∗
is a o al ou pu ma ix o
c×c
dimension whose diagonal elemen s ep esen he
o al ou pu gene a ed in he economy o e e ence and abso bed in he same economy. The
non-diagonal elemen s ep esen in e na ional ade. Le
Xexp
c×c
be he ma ix
X∗
modi ied
so ha he diagonal elemen s ha e been emo ed. Each non-diagonal elemen o
Xexp
ep esen s he g oss expo s om one coun y o ano he . A coun y’s o al g oss expo s,
EXPg
c×1a e de ined as he ow sum o Xexp.
EXPg=Xexpi(3)
In o de o ob ain he o wa d pa icipa ion measu ed as an expo low o alue-
added i is i s equi ed o ob ain he alue-added coe icien s,
1×c
om he echnical
p oduc ion coe icien ma ix.
=u−iA (4)
whe e
u1×c
is a ec o composed o “ones”. The p oduc o he alue-added coe icien s by
he o al ou pu gi es he alue added gene a ed by each economy, which is equi alen o
GDP. The o wa d pa icipa ion in he GVCs o alue-added gene a ed wi hin he EU28
and subsequen ly expo ed by any membe coun y o any coun y in he wo ld,
FPEU
c×1
, is
ob ained as ollows:
FPEU =ˆ
BEUiXexpi(5)
In he exp ession 5,
BEU
ep esen s he in e se Leon ie ma ix modi ied so ha i only
includes he ex e nal in e ela ions o he EU28 membe coun ies. To ob ain he o wa d
sha e in e ms o emissions, he ec o o o al CO
2
emissions,
E1×c
is used as a s a ing
poin . Emission in ensi y, e1×c, is de ined as he a io o CO2emissions o o al ou pu :
e=Eˆ
X−1(6)
The a iable
e
p o ides in o ma ion on he CO
2
emissions emi ed in uni s o mass
o each mone a y uni p oduced. In his ega d, his a iable is used in he same way as
Economies 2021,9, 54 7 o 17
an ou pu mul iplie . The e o e, o ob ain he emissions linked o domes ic alue-added
expo s, µc×1, i needs o p oceed as ollows:
µ=ˆ
e FPEU (7)
whe e
e
is he elemen -wise p oduc be ween he ec o s
e
and
, being
ˆ
e
i s diagonaliza ion.
In addi ion o he desc ip i e analysis, in o de o achie e obus esul s, an econome -
ic model is p oposed o es he EKC hypo hesis, using coun y-le el panel da a o EU28
membe s a es om 2005 o 2015. The p oposed model speci ica ion is as ollows:
ln(CO2)i =β0+β1GDPi +β2GDP2
i +β3DVAFPi +εi (8)
whe e he subsc ip s “i” and “ ” e e o he c oss-sec ion (coun ies) and ime-pe iod
(yea s) uni s, espec i ely; ln(CO
2
) is he dependen a iable and e e s o he na u al
loga i hm o CO
2
emissions pe capi a; GDP is he eal GDP pe capi a, GDP
2
i s squa e,
and DVAFP is he domes ic alue added pe capi a o ien ed o o wa d pa icipa ion in he
in a EU alue chain (Fac o y Eu ope).
Acco ding o he EKC hypo hesis, he sign o
β1
pa ame e is expec ed o be posi i e,
as CO
2
emissions should inc ease wi h he p oduc ion le el p oxied by eal GDP pe capi a;
also, he sign o
β2
pa ame e is expec ed o be nega i e. I he hypo hesis is e i ied,
highe income coun ies should ha e a be e en i onmen al pe o mance (measu ed by
CO2emissions pe capi a) han he lowe income ones.
The u ning poin can be ob ained as a de i a i e o exp ession (8) wi h espec o
GDP and equa ing he de i a i e o 0.
dln(CO2)
d(GDP)=β1+2β2GDP =0
GDP =−β1
2β2
(9)
I should be no ed ha , unlike o he empi ical models ha analyze he ela ionship
be ween economic de elopmen and CO
2
emissions, a a iable ela ed o he o wa d
pa icipa ion in in a-EU alue chain ha e been included o es he in luence o in a-
EU p oduc ion linkages o e CO
2
emissions. In his sense, and in line wi h he PHH,
he eloca ion o ac i i ies wi hin Fac o y Eu ope may be leading o an inc ease in CO
2
emissions pe capi a o he coun ies in ol ed. The e o e, he sign o
β3
pa ame e is
expec ed o be posi i e, since CO
2
emissions should be inc easing as coun ies, many o
hem Eas e n Eu opean, inc ease hei pa icipa ion in he in a-EU alue chain.
Da a used ha e been collec ed in he da abases lis ed abo e (TiVA, Eo a26). Table 1
shows he main s a is ics o he a iables included in he eg ession.
Table 1. Summa y s a is ics o he a iables.
Va iable Mean Median S.D. Min Max
Ln(CO2) 2.03 2.03 0.396 1.31 3.33
GDP 2.68 ×1042.04 ×1041.80 ×1043.52 ×1039.62 ×104
GDP21.04 ×1094.18 ×1081.41 ×1091.24 ×1079.26 ×109
DVAFP 1.78 ×1031.08 ×1032.31 ×103123 1.50 ×104
No e: “Ln(CO
2
)” e e s o he CO
2
emissions pe capi a (in log), “GDP” e e s o he eal GDP pe capi a, and
“DVAFP” e e s o he domes ic alue-added pe capi a o ien ed o in a-EU o wa d pa icipa ion in GVC. Sou ce:
Own elabo a ion based on T ade in Value Added (TiVA), Eo a26, and he Wo ld Bank.
Rega ding he model es ima ion, he use o he Pooled O dina y Leas Squa es (POLS)
me hod by a log-le el equa ion is used o a oid mul icollinea i y p oblems, he e o e a
uni change in he independen a iables is expec ed o change de dependen a iable by
100
·βj
pe cen . The model es ima ion esul s using GRETL so wa e a e p esen ed and
discussed in Sec ion 4.2.
Economies 2021,9, 54 8 o 17
4. Resul s and Discussion
4.1. Desc ip i e Analysis: Fac s and T ends
Based on he o mula ion and da a indica ed in he me hodological
sec ion (Sec ion 3)
,
he changes in in a-EU p oduc ion linkages by coun y a e analyzed, conside ing he alue-
added gene a ed and expo ed in he Eu opean egional alue chain. In his espec , i s , a
compa ison is made be ween o wa d pa icipa ion a e in 2005 and 2015, co esponding
wi h he s age o in eg a ion o he CEECs in o he EU.
As can be seen in Figu e 1, mos EU coun ies ha e inc eased hei le el o o wa d
pa icipa ion in GVCs h oughou in a-EU p oduc ion linkages as a pe cen age o hei
o al g oss expo s (ex a and in a-EU expo s) be ween 2005 and 2015. Mo eo e , i is
impo an o no e ha in a-EU expo s accoun in many cases o 60–70% o membe s a es’
ex e nal ade.
Economies 2021, 9, x FOR PEER REVIEW 8 o 18
o e a uni change in he independen a iables is expec ed o change de dependen a i-
able by 100 · βj pe cen . The model es ima ion esul s using GRETL so wa e a e p esen ed
and discussed in Sec ion 4.2.
4. Resul s and Discussion
4.1. Desc ip i e Analysis: Fac s and T ends
Based on he o mula ion and da a indica ed in he me hodological sec ion (Sec ion
3), he changes in in a-EU p oduc ion linkages by coun y a e analyzed, conside ing he
alue-added gene a ed and expo ed in he Eu opean egional alue chain. In his espec ,
i s , a compa ison is made be ween o wa d pa icipa ion a e in 2005 and 2015, co e-
sponding wi h he s age o in eg a ion o he CEECs in o he EU.
As can be seen in Figu e 1, mos EU coun ies ha e inc eased hei le el o o wa d
pa icipa ion in GVCs h oughou in a-EU p oduc ion linkages as a pe cen age o hei
o al g oss expo s (ex a and in a-EU expo s) be ween 2005 and 2015. Mo eo e , i is
impo an o no e ha in a-EU expo s accoun in many cases o 60–70% o membe
s a es’ ex e nal ade.
Figu e 1. In a-EU o wa d global alue chains (GVC) pa icipa ion as a pe cen age o o al g oss expo s. EU28 coun ies.
2005 and 2015 See Appendix A o coun y codes lis . Sou ce: Own elabo a ion based on TiVA.
In his sense, i is possible o es ablish ha a la ge pa o he ex e nal ac i i y o EU
coun ies is o ganized h ough egional alue chains, and no only in he o m o global
chains, in he so-called Fac o y Eu ope. F om Figu e 1 i can be seen ha in a-EU alue
c ea ion p ocesses ha e s eng hened o e he pe iod unde analysis. The e a e o he wo
impo an egions whe e in a- egional ade s ands ou : Fac o y Asia and Fac o y Ame -
ica. The exis ence o hese a eas o high in a- egional ade in ensi y implies, in e ms o
expo s- ela ed emissions, ha mos o he di ec en i onmen al e ec s o o eign ade
emain wi hin he egion whe e he ade lows o igina e.
In his case, Fac o y Eu ope s ands ou he o he wo ac o ies (Asia and Ame ica),
showing a sha e o in a- egional expo s abo e 50% o o al EU28 expo s, as can be seen
in Figu e 2.
Au Bel
Cze
Dnk
Es
Fin
F a Deu
G c
Hun
I l
I a
L a
L u
Lux
Nld
Pol
P
S k
S n
Esp
Swe
Gb
Bg
H
Cyp
Ml
Rou
EU28
0
2
4
6
8
10
12
14
16
18
0 2 4 6 8 10 12 14 16 18
In a-EU o wa d GVC pa icipa ion (%) 2015
In a-EU o wa d GVC pa icipa ion (%) 2005
Figu e 1. In a-EU o wa d global alue chains (GVC) pa icipa ion as a pe cen age o o al g oss expo s. EU28 coun ies.
2005 and 2015 See Appendix A o coun y codes lis . Sou ce: Own elabo a ion based on TiVA.
In his sense, i is possible o es ablish ha a la ge pa o he ex e nal ac i i y o EU
coun ies is o ganized h ough egional alue chains, and no only in he o m o global
chains, in he so-called Fac o y Eu ope. F om Figu e 1i can be seen ha in a-EU alue
c ea ion p ocesses ha e s eng hened o e he pe iod unde analysis. The e a e o he
wo impo an egions whe e in a- egional ade s ands ou : Fac o y Asia and Fac o y
Ame ica. The exis ence o hese a eas o high in a- egional ade in ensi y implies, in e ms
o expo s- ela ed emissions, ha mos o he di ec en i onmen al e ec s o o eign ade
emain wi hin he egion whe e he ade lows o igina e.
In his case, Fac o y Eu ope s ands ou he o he wo ac o ies (Asia and Ame ica),
showing a sha e o in a- egional expo s abo e 50% o o al EU28 expo s, as can be seen
in Figu e 2.
Al hough he sha e o in a-Eu opean ade has declined o e ime, i s ill accoun s
o mo e han hal o he in e na ional ade o mos membe coun ies. Fu he mo e, i
should be no ed ha , despi e he inc easing inse ion o Eu opean expo s in in e na ional
ma ke s, in a-EU alue c ea ion has deepened, inc easing he in e nal p oduc ion chains
o he Fac o y Eu ope, as al eady poin ed ou in Figu e 1.
Economies 2021,9, 54 9 o 17
Economies 2021, 9, x FOR PEER REVIEW 9 o 18
Figu e 2. EU28 expo s (ex a and in a) and in a-EU o wa d pa icipa ion. 2005 and 2015 (The alue da a a e in millions
o US$, he pe cen age da a a e calcula ed ou o he o al EU28 expo s). Sou ce: Own elabo a ion based on TiVA.
Al hough he sha e o in a-Eu opean ade has declined o e ime, i s ill accoun s
o mo e han hal o he in e na ional ade o mos membe coun ies. Fu he mo e, i
should be no ed ha , despi e he inc easing inse ion o Eu opean expo s in in e na ional
ma ke s, in a-EU alue c ea ion has deepened, inc easing he in e nal p oduc ion chains
o he Fac o y Eu ope, as al eady poin ed ou in Figu e 1.
Be o e analyzing he en i onmen al impac o ade in alue added om domes ic
sou ces, i is wo h analyzing he changes in he emissions in ensi y o he membe s a es
in he pe iod conside ed. Emissions in ensi y is he a io be ween he olume o emissions
and o al ou pu , which esul s in onnes o CO2 pe housand dolla s o o al ou pu (Fig-
u e 3).
Figu e 3 shows some disc epancies in he e olu ion o emissions in ensi y. In pa ic-
ula , coun ies wi h a highe ini ial emissions in ensi y also show a highe pe cen age e-
duc ion o e ime. These coun ies a e mainly ep esen ed by he Eas e n Eu opean econ-
omies. Fo he o he membe s a es, he educ ion in emissions in ensi y is less ele an .
Behind he ini ial disc epancy in emissions in ensi y and i s e olu ion o e ime lies
he in eg a ion o he abo e-men ioned economies in o he EU. The in eg a ion p ocess
equi es he ha moniza ion o egula ions, including, o some ex en , en i onmen al is-
sues. The adop ion o Eu opean en i onmen al s anda ds signi ican ly con ibu es o he
educ ion o he emission in ensi y in Eas e n Eu opean economies.
In his sense, hese esul s show a educ ion in he dispa i ies be ween membe coun-
ies in e ms o CO2 emissions linked o in e na ional ade. Howe e , his indica o does
no allow o obse e he ex en o which Eas e n Eu opean coun ies ha e a ac ed he
mos pollu ing asks o Fac o y Eu ope.
59.6%
53.2%
40.4%
46.8%
12.4%
13.1%
0
500
1000
1500
2000
2500
3000
3500
4000
2005 2015
In a-EU expo s Ex a-EU expo s In a-EU o wa d pa icipa ion
Figu e 2.
EU28 expo s (ex a and in a) and in a-EU o wa d pa icipa ion. 2005 and 2015 (The alue da a a e in millions
o US$, he pe cen age da a a e calcula ed ou o he o al EU28 expo s). Sou ce: Own elabo a ion based on TiVA.
Be o e analyzing he en i onmen al impac o ade in alue added om domes ic
sou ces, i is wo h analyzing he changes in he emissions in ensi y o he membe s a es
in he pe iod conside ed. Emissions in ensi y is he a io be ween he olume o emissions
and o al ou pu , which esul s in onnes o CO
2
pe housand dolla s o o al ou pu
(Figu e 3).
Economies 2021, 9, x FOR PEER REVIEW 10 o 18
Figu e 3. Emissions in ensi y ( onnes o CO2 pe housand dolla s) o EU28 coun ies. 2005 and 2015. Sou ce: Own elabo-
a ion based on TiVA and Eo a26.
Mo eo e , i is possible o analyze he compa a i e e olu ion o emissions pe capi a
and GDP pe capi a, as Figu e 4 shows. Al hough he e i ica ion o he EKC is no he
ocus o his pape , his compa ison can p o ide new insigh s on his ela ionship.
Figu e 4. E olu ion o GDP pe capi a (cons an 2005 US$) and CO2 emissions in EU28 coun ies, 2005–15. See Appendix
A o coun y codes lis . Sou ce: Own elabo a ion based on TiVA, Eo a26 and he Wo ld Bank.
Acco ding o Figu e 4, mos Eu opean economies ha e dec eased hei GDP pe cap-
i a (cons an p ices) while educing hei emissions pe capi a ( hi d quad an ). Howe e ,
he in eg a ion o he Eas e n economies has no led all EU coun ies o beha e in he same
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
Bulga ia
Es onia
Romania
Poland
Slo ak Republic
Czech Republic
Li huania
C oa ia
Slo enia
Hunga y
G eece
La ia
Cyp us
Mal a
Po ugal
EU
Spain
Ge many
Finland
Belgium
Aus ia
I aly
Ne he lands
Uni ed Kingdom
Luxembou g
Denma k
F ance
I eland
Sweden
2005 2015
Au
Bel
Bg
H
Cyp
Cze
Dnk
Es
Fin F a
Deu
G c
Hun
I l
I a
L a L u
Lux
Ml
Nld
Pol
P
Rou S k
S n
Esp Swe
Gb
EU28
-6
-5
-4
-3
-2
-1
0
1
2
-4 -3 -2 -1 0 1 2 3 4 5 6
CO2pe capi a, cumula i e a ia ion a e 2005-2015
GDP pe capi a (cons an p ices), cumula i e a ia ion a e 2005–15
Figu e 3.
Emissions in ensi y ( onnes o CO
2
pe housand dolla s) o EU28 coun ies. 2005 and 2015. Sou ce: Own
elabo a ion based on TiVA and Eo a26.
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