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Trade and Human Capital in Global Value Chain in Developed and Developing Countries

Author

Listed:
  • Wenxiao Wang

    (Zhongnan University of Economics and Law)

  • Shandre Thangavelu

    (Jeffrey Cheah Institute for Southeast Asia Sunway University and Institute for International Trade University of Adelaide)

Abstract

This paper investigates the effects of human capital on bilateral domestic value-added trade in global value chains (GVCs) for 43 countries and 56 sectors. In contrast to previous studies, this paper estimated an approximate gravity model of value-added trade to capture the role of human capital in determining the cross-border production linkages via value-added trade. The results show that the domestic value-added trade flows depend critically on human capital development in both exporting and importing countries. The results indicate a positive effect of skilled intensity on bilateral domestic value-added trade in GVCs. We also observe a larger positive effect of skills on the GVC value-added trade for the developing economies. The paper highlights the importance of trade liberalization and forward-looking human capital development policies for the competitiveness of the developing countries in the value-added trade in GVC.

Suggested Citation

  • Wenxiao Wang & Shandre Thangavelu, 2021. "Trade and Human Capital in Global Value Chain in Developed and Developing Countries," Asian Economic Papers, MIT Press, vol. 20(3), pages 1-15, Fall.
    • Handle: RePEc:tpr:asiaec:v:20:y:2021:i:3:p:1-15
    DOI: 10.1162/asep_a_00834
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