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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.

Suggested Citation

  • Sen, Kunal, 2008. "International Trade and Manufacturing Employment Outcomes in India: A Comparative Study," WIDER Working Paper Series 087, World Institute for Development Economic Research (UNU-WIDER).
  • Handle: RePEc:unu:wpaper:rp2008-87
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    References listed on IDEAS

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    1. 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 154-164, March.
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    6. Harrison, Ann E., 1994. "Productivity, imperfect competition and trade reform : Theory and evidence," Journal of International Economics, Elsevier, pages 53-73.
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    9. Levinsohn, James, 1993. "Testing the imports-as-market-discipline hypothesis," Journal of International Economics, Elsevier, pages 1-22.
    10. Hine, Robert C & Wright, Peter W, 1998. "Trade with Low Wage Economies, Employment and Productivity in UK Manufacturing," Economic Journal, Royal Economic Society, vol. 108(450), pages 1500-1510, September.
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    12. V. N. Balasubramanyam, 2003. "India: Trade Policy Review," The World Economy, Wiley Blackwell, vol. 26(9), pages 1357-1368, September.
    13. 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.
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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.
    2. Vashisht, Pankaj, 2016. "Creating manufacturing jobs in India: Has openness to trade really helped?," Journal of Asian Economics, Elsevier, pages 53-64.
    3. Karishma Banga, 2017. "Impact of Linking into Global Value Chains on Indian Employment," Working Papers 1701, Council on Economic Policies.

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    Keywords

    international trade; manufacturing; employment; India;

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