Job Creation and Trade in Manufactures: Industry Level Analysis Across Countries

This paper examines industry level responses of manufacturing employment in the context of globalization using a large sample of developed, developing and transition economies. We find that developing countries need atypically high rates of value added growth (about 10%) to increase manufacturing employment appreciably (about 4%). The employment benefits of export-orientation are also modest even in "comparative advantage" industries of developing countries. However, diversifying the export basket contributes significantly to employment growth, particularly in the medium- and high-technology industries. Import-competition does not undermine employment growth in low-technology industries of developing countries while it displaces jobs in the same industries in OECD and transition economies. For developing countries, import-induced job losses are higher in the more capital-intensive medium-technology industries. Jobs in high-technology industries are less sensitive to imports with positive relationships observed in the OECD. Investment also complements job creation in lowtechnology industries of developing countries that have yet to industrialize.