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Trade liberalisation and manufacturing employment in developing countries

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  • Busse, Matthias
  • Dary, Stanley Kojo
  • Wüstenfeld, Jan

Abstract

The manufacturing sector has played an important role in the structural transformation process in the developing world by providing jobs and income opportunities. Using data from 131 developing countries from 1991 to 2020, we estimate the impact of trade liberalisation on manufacturing employment using panel fixed-effects and instrumental variable regression approaches. We find that trade liberalisation – on average – has harmed manufacturing employment in developing countries. There are considerable differences at the regional level; the impact has been most substantial in sub-Saharan African and Latin American countries. At least in these regions, trade liberalisation has contributed to deindustrialisation. Policies that improve labour productivity in manufacturing will increase the competitiveness of manufacturing firms in these countries in the face of growing trade globalisation.

Suggested Citation

  • Busse, Matthias & Dary, Stanley Kojo & Wüstenfeld, Jan, 2024. "Trade liberalisation and manufacturing employment in developing countries," Structural Change and Economic Dynamics, Elsevier, vol. 70(C), pages 410-421.
    • Handle: RePEc:eee:streco:v:70:y:2024:i:c:p:410-421
    DOI: 10.1016/j.strueco.2024.05.003
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    References listed on IDEAS

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    More about this item

    Keywords

    Trade liberalisation; Manufacturing employment; Developing countries;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F66 - International Economics - - Economic Impacts of Globalization - - - Labor
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy

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