Research Paper 29: Does a value-added smile curve imply an environmental frown curve?

Global value chains (GVCs) play a crucial role in international trade today. High value-added activities tend to be concentrated at the beginning and end of value chains, resulting in a U-shaped progression along the production steps - the so-called "smile curve". However, the distribution of CO₂ emissions along the value chain is relatively unexplored. Here we map the embedded CO₂ emissions in GVCs to test whether emissions are distributed differently along the production stages than value creation. We find that activities with high emissions per unit of labor compensation are concentrated in the early stages (e.g. energy production, mining), while the late stages (e.g. retail) have lower emission intensities. This leads to a downward sloping emissions curve with indicative evidence of an inverted U-shape. We examine several examples at different levels of aggregation and provide an interactive platform to explore the distribution of value added and emission contributions along different GVCs.