Impact of Digital Inputs on Green Global Value Chain Participation: Evidence from Chinese Manufacturing Firms

Promoting the green global value chain (GVC) participation is key to address climate change and increase GVC resilience. This study develops a heterogeneous firm model based on the international labor division perspective to theoretically and empirically investigate how digital inputs affect firms’ green GVC participation. The results show that: (i) Digital inputs can facilitate firms’ green GVC participation, and the role of digital inputs from domestic sources is greater than that from foreign sources. (ii) Digital inputs promote firms’ green GVC participation mainly through four mechanisms: production scale effect, green innovation effect, product structure effect and factor substitution effect. (iii) The positive effect of digital inputs on firms’ green GVC participation is more pronounced for mature firms, state-owned firms, and non-heavily polluting industries. (iv) This study further finds digital inputs reduce the GVC embodied carbon emissions. (v) Additionally, the improvement of GVC position will further strengthen the promoting effect of digital inputs on green GVC participation.