Global value chains embedding and energy inequality in international trade

Abstract

As global value chains (GVCs) continue to deepen, energy resources embedded in international trade are increasingly redistributed across countries through cross-border production networks, potentially reshaping patterns of energy utilization and exacerbating inequality in trade related energy use. This study aims to examine the impact of GVCs embedding on energy inequality in trade and its underlying mechanisms. Using the Eora Global Multi-Regional Input-Output (MRIO) database, we quantify trade-induced energy utilization across 96 economies and construct an energy inequality (EI) index to measure disparities in trade energy use. We further employ econometric models to investigate the impact of GVC participation on EI and to identify its transmission mechanisms. The results show that the greater GVCs embeddedness significantly reduces energy inequality in trade. Heterogeneity analysis indicates that this effect varies with the level of economic development and the form of GVC participation. Mechanism analysis further reveals that GVCs participation affects EI through the joint effects of trade scale expansion and technological advancement. These findings deepen understanding of the relationship between GVCs participation and energy inequality in trade, and provide policy implications for promoting more balanced and sustainable energy use in the global trading system.