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Did International Trade Destroy or Create Jobs in Indian Manufacturing?


  • Seethamma Natarajan Rajesh Raj

    (Centre for Multi-Disciplinary Development Research (CMDR), Dharwad, India)

  • Kunal Sen

    (University of Manchester, Manchester, UK)


Since the mid-1980s, the Indian manufacturing sector has rapidly increased its integration with the world economy. In this article, we examine whether international trade created or destroyed jobs both in the Indian formal and informal manufacturing sectors. We use a variety of methodological approaches – factor content, growth accounting and econometric modelling – which allow us to capture the scale, composition and process effects of international trade on employment. We find that international trade has not had a significant positive effect on manufacturing employment via scale and composition effects, and may have had a negative effect via the process effect. This suggests that international trade may not be the major source of job creation for India's large pool of surplus unskilled labour.Depuis le milieu des années 1980, le secteur manufacturier indien renforce rapidement son intégration dans l’économie mondiale. Dans cet article, nous cherchons à déterminer si le commerce international a contribué à la création ou à la destruction d’emplois dans les secteurs manufacturiers formel et informel indiens. Nous avons utilisé diverses approches méthodologiques – contenu en facteurs, analyse comptable de croissance et modélisation économétrique – ce qui nous permet de rendre compte de l’impact sur l’emploi des effets d’échelle, de composition et de processus, liés au commerce international. Nous constatons que le commerce international n’a pas, à travers les effets d’échelle et de composition qui lui sont associés, d’influence significativement positive sur l’emploi manufacturier, et qu’il a peut être même, à travers l’effet de processus, une influence négative. Ceci suggère que les échanges internationaux ne sont peut être pas la principale source de création d’emplois pour le vaste réservoir de main d’œuvre non qualifiée en Inde.

Suggested Citation

  • Seethamma Natarajan Rajesh Raj & Kunal Sen, 2012. "Did International Trade Destroy or Create Jobs in Indian Manufacturing?," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 24(3), pages 359-381, July.
  • Handle: RePEc:pal:eurjdr:v:24:y:2012:i:3:p:359-381

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    Cited by:

    1. Subash Sasidharan & S. N. Rajesh Raj, 2014. "The Growth Barriers of Informal Sector Enterprises: Evidence from India," The Developing Economies, Institute of Developing Economies, vol. 52(4), pages 351-375, December.

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