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Impact of Global Value Chains on Employment in India

Author

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  • Banga, Karishma

    (University of Cambridge)

Abstract

With Global Value Chains increasingly shaping the current economic and political landscape, it has become vital to understand their implications for developing economies. This study covers the manufacturing, services, and agricultural sectors. Moreover, it examines the industry-level impact of participation in Global Value Chains on employment growth during 1995~2011. Using methodologies of fixed effects and generalized method of moments, it analyzes how increasing Foreign Value Added in output, Foreign Value Added in exports (backward linkages), and Domestic Value Added in exports of intermediate goods (forward linkages) can affect employment growth. The results reveal that higher backward linkages have negatively influenced employment growth, more so in the nonmanufacturing industries of India. However, higher forward linkages did not have any statistically significant impact on employment. In conclusion, with higher backward linkages displacing domestic labor and higher forward linkages not being able to boost employment, the net effect of Global Value Chains participation on employment growth in Indian industries has been negative.

Suggested Citation

  • Banga, Karishma, 2016. "Impact of Global Value Chains on Employment in India," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 31(3), pages 631-673.
    • Handle: RePEc:ris:integr:0696
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    Citations

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    Cited by:

    1. Jeffrey Kouton & Sulpice Amonle, 2021. "Global value chains, labor productivity, and inclusive growth in Africa: empirical evidence from heterogeneous panel methods," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 23(1), pages 1-23, June.
    2. Basudeb Guha-Khasnobis & Anwesha Aditya & Suvir Chandna, 2023. "Employment and global value chain participation: the Indian experience," International Journal of Economic Policy Studies, Springer, vol. 17(1), pages 75-94, February.
    3. Carolina Calatayud & María Engracia Rochina Barrachina, 2023. "How do firms in Sub‐Saharan Africa benefit from global value chains?," South African Journal of Economics, Economic Society of South Africa, vol. 91(2), pages 214-241, June.
    4. Duarte, Rosa & Espinosa-Gracia, Adrián & Jiménez, Sofía & Sánchez-Chóliz, Julio, 2022. "New insights on the relationship between the involvement of countries in global value chains, and intra- and inter-country inequalities," Structural Change and Economic Dynamics, Elsevier, vol. 63(C), pages 320-329.
    5. Saon Ray & Smita Miglani, 2020. "India's GVC integration: An analysis of upgrading efforts and facilitation of lead firms," Indian Council for Research on International Economic Relations (ICRIER) Working Paper 386, Indian Council for Research on International Economic Relations (ICRIER), New Delhi, India.
    6. Rohit, Kumar, 2023. "Global value chains and structural transformation: Evidence from the developing world," Structural Change and Economic Dynamics, Elsevier, vol. 66(C), pages 285-299.
    7. Ahmet Sekerkaya & Feyza Nur Ozkan & Gozde Gusan Kose & Dogan Akarsu, 2020. "Consumer Reactions to Technological Attributes in Product Design: A Technology Acceptance Model Perspective," Bogazici Journal, Review of Social, Economic and Administrative Studies, Bogazici University, Department of Economics, vol. 34(2), pages 151-176.
    8. Esquivias, Miguel Angel & Purwono, Rudi & Sugiharti, Lilik & Heriqbaldi, Unggul & Handoyo, Rossanto Dwi, 2020. "Value Chains, Production Networks and Regional Integration: The Case of Indonesia," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 54(1), pages 135-151.
    9. Deb Kusum Das & Neha Gupta, 2019. "Climbing up India’s Manufacturing Export Ladder: How Competitive are Intermediate Goods?," Indian Council for Research on International Economic Relations (ICRIER) Working Paper 371, Indian Council for Research on International Economic Relations (ICRIER), New Delhi, India.
    10. Karishma Banga, 2019. "Digital technologies and 'value' capture in global value chains: Empirical evidence from Indian manufacturing firms," WIDER Working Paper Series wp-2019-43, World Institute for Development Economic Research (UNU-WIDER).
    11. Bishwanath Goldar & Deb Kusum Das & Pilu Chandra Das & Neha Gupta, 2020. "Domestic Versus Imported Contents in Exports: The Case of India’s Merchandise Trade," Journal of South Asian Development, , vol. 15(1), pages 62-96, April.
    12. Farole, Thomas & Hollweg, Claire & Winkler, Deborah, 2018. "Trade in Global Value Chain: An Assessment of Labor Market Implication," Jobs Group Papers, Notes, and Guides 30318036, The World Bank.
    13. Halit Yanikkaya & Abdullah Altun & Pinar Tat, 2019. "Openness and Deindustrialization: A Turkish Case," Bogazici Journal, Review of Social, Economic and Administrative Studies, Bogazici University, Department of Economics, vol. 33(2), pages 1-25.
    14. Ketan Reddy & Subash Sasidharan, 2021. "A Portrait of Global Value Chain Linkages of Indian Manufacturing," Journal of Asian Economic Integration, , vol. 3(2), pages 235-250, September.
    15. Sunitha Raju & V.Raveendra Saradhi, 2019. "Imports from China:Threat or Opportunity Analysis of Indian Manufacturing Sector," Working Papers 1938, Indian Institute of Foreign Trade.
    16. Carlos A. Carrasco & Edgar Demetrio Tovar-García, 2021. "Trade and growth in developing countries: the role of export composition, import composition and export diversification," Economic Change and Restructuring, Springer, vol. 54(4), pages 919-941, November.
    17. Upalat Korwatanasakul & Tran Thi Hue, 2022. "Global Value Chain Participation and Labour Productivity in Manufacturing Firms in Viet Nam: Firm-Level Panel Analysis," Working Papers DP-2022-34, Economic Research Institute for ASEAN and East Asia (ERIA).
    18. Bhushan Praveen Jangam & Badri Narayan Rath, 2021. "Does global value chain participation enhance domestic value‐added in exports? Evidence from emerging market economies," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(2), pages 1681-1694, April.
    19. Karishma Banga, 2022. "Digital Technologies and Product Upgrading in Global Value Chains: Empirical Evidence from Indian Manufacturing Firms," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 34(1), pages 77-102, February.
    20. Can Li & Qi He & Han Ji, 2023. "Can Global Value Chain Upgrading Promote Regional Economic Growth? Empirical Evidence and Mechanism Analysis Based on City-Level Panel Data in China," Sustainability, MDPI, vol. 15(15), pages 1-22, July.

    More about this item

    Keywords

    Global Value Chains; Employment in India; Generalized Method of Moments; Trade in Value Added;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F66 - International Economics - - Economic Impacts of Globalization - - - Labor

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