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International Trade and Manufacturing Employment Outcomes in India: A Comparative Study

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  • Sen, Kunal

Abstract

The Indian economy has observed significant trade reforms since the mid 1980s, and the Indian manufacturing sector has rapidly increased its integration with the world economy. In this paper, we ask the question: did the increased trade integration create or destroy jobs in the Indian manufacturing sector? We attempt to answer this question by employing a variety of methodological approaches ? factor content, growth accounting and econometric modelling. We also compare India?s employment outcomes with four other countries ? Bangladesh, Kenya, South Africa, and Vietnam ? where similar methodological approaches were used. We find that the impact of international trade on manufacturing employment seems to be similar to those found for the two African countries ? Kenya and South Africa ? rather than the two Asian countries ? Bangladesh and Vietnam. Thus, the overall effect of international trade on manufacturing employment has been minimal, a surprising result for a country with an apparent comparative advantage in labour-intensive manufacturing goods, and a large excess supply of unskilled labour.

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Bibliographic Info

Paper provided by World Institute for Development Economic Research (UNU-WIDER) in its series Working Paper Series with number RP2008/87.

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Length: 26 pages
Date of creation: 2008
Date of revision:
Handle: RePEc:unu:wpaper:rp2008-87

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Keywords: international trade; manufacturing; employment; India;

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  1. Rama, Martin, 2003. "Globalization and workers in developing countries," Policy Research Working Paper Series 2958, The World Bank.
  2. Horn, Henrik & Lang, Harald & Lundgren, Stefan, 1995. "Managerial effort incentives, X-inefficiency and international trade," European Economic Review, Elsevier, vol. 39(1), pages 117-138, January.
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  7. Martin, John P & Evans, John M, 1981. "Notes on Measuring the Employment Displacement Effects of Trade by the Accounting Procedure," Oxford Economic Papers, Oxford University Press, vol. 33(1), pages 154-64, March.
  8. Richard Palmer-Jones & Kunal Sen, 2003. "What has luck got to do with it? A regional analysis of poverty and agricultural growth in rural India," Journal of Development Studies, Taylor & Francis Journals, vol. 40(1), pages 1-31.
  9. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 277-97, April.
  10. Harrison, Ann E., 1994. "Productivity, imperfect competition and trade reform : Theory and evidence," Journal of International Economics, Elsevier, vol. 36(1-2), pages 53-73, February.
  11. Greenaway, David & Hine, Robert C. & Wright, Peter, 1999. "An empirical assessment of the impact of trade on employment in the United Kingdom," European Journal of Political Economy, Elsevier, vol. 15(3), pages 485-500, September.
  12. Milner, Chris & Wright, Peter, 1998. "Modelling Labour Market Adjustment to Trade Liberalisation in an Industrialising Economy," Economic Journal, Royal Economic Society, vol. 108(447), pages 509-28, March.
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Cited by:
  1. Singh, Lakhwinder & Shergill, Baldev Singh, 2009. "Technological Capability, Employment Growth and Industrial Development: A Quantitative Anatomy of Indian Scenario," MPRA Paper 19059, University Library of Munich, Germany.

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