Digital and Green Transformations: Leveraging Global Value Chains in Belt and Road Initiative

ABSTRACT

This study investigates the link between Global Value Chain (GVC), Digital Adoption Index, and Green Transformation Index across 89 Belt and Road (B&R) countries during 2004–2019. The study employs a multi‐regional input–output framework and the System Generalized Method of Moments test to empirically examine the differential influences of GVCs Position Index (GVCs‐PI), forward and backward GVCs modes on digital and green outcomes and controlling for reverse causality and endogeneity. The study revealed that upgrading the GVCs‐PI fosters the Digital Adoption Index and Green Transformation Index. Considering GVCs heterogeneity, forward GVCs positively affect digital adoption and green transformation, particularly in higher‐income economies. In contrast, backward GVCs participation is negatively linked with digital growth and green transformation outcomes, especially in emerging and developing economies. These findings are indicative of the perils of technological and environmental lock‐in for economies that have participated in GVCs without upgrading their positions. The study contributes to the current literature on ICT, Resources‐Based‐View and Transaction‐Cost‐Economics by offering economy‐specific policy implications, such as targeted investment in digital infrastructures, green and clean technologies transfer programs, and Research and Development incentives that foster sustainable growth in B&R initiative.