The heterogeneous causal impacts of global value chains on climate vulnerability: Does institutional quality matter?

In the context of increasing environmental concerns, the expansion of GVC is increasingly becoming an important factor in solving this issue. Our study investigates the heterogeneous causal impacts of GVC on climate vulnerability and examines how institutional quality moderates this relationship by using a global panel dataset of 57 countries from 2009 to 2018 with the IVQR to deal with both heterogeneity and endogeneity issues. The interesting findings show that GVC have significant negative heterogeneous causal impacts on climate vulnerability and these impacts are larger in more vulnerable countries. Besides, institutional quality is mentioned as an important moderating variable, amplifying the effects of GVC through improved governance, regulatory enforcement, and adaptive capacity. Therefore, some insightful policy implications are suggested to reduce climate vulnerability through promoting GVC participation as well as promoting institutional quality. • GVC participation causally reduces climate vulnerability across countries. • Effects of GVC are stronger in countries with higher climate vulnerability. • Institutional quality significantly amplifies GVC-driven climate resilience. • IVQR captures endogeneity and distributional heterogeneity.