Ecologically unequal exchange and uneven development patterns along global value chains

Abstract

This paper relates participation in global value chains (GVCs) to development patterns and ecologically unequal exchange (EUE). We conduct a principal components analysis and a clustering analysis along six dimensions (GVC participation, GVC value capture, investment, socioeconomic development, domestic environmental impact and international environmental balance) for 133 countries between 1995 and 2015. We find three social, ecological, productive development and GVC insertion patterns: “curse of GVC marginalization”, “ecologically perverse upgrading” and “reproduction of the core”. While our results confirm the asymmetry in ecological degradation between high-income and low-income economies shown by EUE, it refines and nuances these findings. We argue that environmentalasymmetries are driven in large part by differences in how countries articulate within GVCs. Countries with a higher capacity to capture value from GVC participation (“reproduction of the core”) are able to displace environmental impacts to countries facing a trade-off between upgrading in GVCs and ecological degradation (“ecologically perverse upgrading”). Marginalization from GVCs, mitigates the impact of ecologically unequal exchange but constitutes a barrier to socio-economic benefits. Moreover, the lack of diffusion of more ecologically-efficient processes through GVCs has a negative impact on domestic ecological degradation for countries of the “curse of GVC marginalization” group.