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Journal of Economic Integration 2016 September;31(3) :631-673.
Impact of Global Value Chains on Employment in India

Karishma Banga 

University of Cambridge, Cambridge, United Kingdom
Corresponding Author: Karishma Banga ,Tel: +44 (0) 7500622956, Email:
Copyright ©2016 Journal of Economic Integration
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.

JEL Classification
F16: Trade and Labor Market Interactions
F14: Empirical Studies of Trade
F66: Labor
Keywords: Global Value Chains | Employment in India | Generalized Method of Moments | Trade in Value Added
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