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Impact of Global Value Chains on Employment in India

Author

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  • Karishma Banga

    (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

  • Karishma Banga, 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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    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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