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Creating manufacturing jobs in India: Has openness to trade really helped?

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  • Vashisht, Pankaj

Abstract

After following inward oriented economic policies for nearly four decades, India opened up to international trade in the early 1990s. Since then, the trade integration of the Indian economy in general and the manufacturing sector in particular has increased phenomenally. Against this backdrop, this paper analyses the direct as well as indirect impact of trade on jobs in the Indian manufacturing sector. Using the growth accounting approach, we find that the direct impact of trade on manufacturing jobs has been positive. However, trade induced decrease in labour demand has neutralized direct job gains to a great extent. Therefore, unlike other Asian economies, the overall employment gain from trade has been minimal. The paper argues that supply side constraints should be addressed urgently to enhance job gains from international trade.

Suggested Citation

  • Vashisht, Pankaj, 2016. "Creating manufacturing jobs in India: Has openness to trade really helped?," Journal of Asian Economics, Elsevier, vol. 42(C), pages 53-64.
    • Handle: RePEc:eee:asieco:v:42:y:2016:i:c:p:53-64
    DOI: 10.1016/j.asieco.2016.01.002
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    Cited by:

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    2. Boker Poumie & Herve Kaffo Fotio & Guy P. Dazoue Dongue, 2022. "The employment effects of intra‐African exports," African Development Review, African Development Bank, vol. 34(4), pages 541-555, December.
    3. Sanjeev Kumar & Falguni Pattanaik & Ajay K. Singh, 2021. "Modeling Trade–Employment Elasticity Nexus: Evidence from India," Emerging Economy Studies, International Management Institute, vol. 7(1), pages 62-75, May.
    4. Hlalefang Khobai & Clement Moyo, 2021. "Trade openness and industry performance in SADC countries: is the manufacturing sector different?," International Economics and Economic Policy, Springer, vol. 18(1), pages 105-126, February.
    5. Pankaj Vashisht, 2018. "Destruction or Polarization: Estimating the Impact of Technology on Jobs in Indian Manufacturing," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 61(2), pages 227-250, June.
    6. Rath, Badri Narayan, 2018. "Productivity growth and efficiency change: Comparing manufacturing- and service-based firms in India," Economic Modelling, Elsevier, vol. 70(C), pages 447-457.
    7. Sèna Kimm Gnangnon, 2020. "Aid for Trade and sectoral employment diversification in recipient-countries," Economic Change and Restructuring, Springer, vol. 53(2), pages 265-295, May.
    8. Subash Sasidharan & Ketan Reddy, 2021. "Innovation, Product Sophistication and Export Market Survival: A Study of Indian Manufacturing," Working Papers DP-2021-45, Economic Research Institute for ASEAN and East Asia (ERIA).

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    More about this item

    Keywords

    Manufacturing jobs; Employment; International trade; India;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • L6 - Industrial Organization - - Industry Studies: Manufacturing

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