Global value chain embeddedness, labour productivity and employment in the Asia-Pacific countries
Studies in Economics and Finance
ISSN: 1086-7376
Article publication date: 13 April 2020
Issue publication date: 7 June 2021
Abstract
Purpose
The purpose of this paper is to examine the effects of the global value chain (GVC) participation and the associated improvements in labour productivity and employment among 16 Asia-Pacific countries.
Design/methodology/approach
First, the indicators of GVC participation are computed using annual multi-region input-output tables over the period 1990-2014. Second, the study examines the long-run association between GVCs and labour productivity through Pedroni (2004) and Westerlund (2007) panel cointegration techniques. Then in the third step, the long-run elasticities are estimated using dynamic ordinary least squares (DOLS) and fixed-random effects models. Finally, the direction of causality is examined using the Dumitrescu and Hurlin (2012) panel causality technique.
Findings
The result shows an increasing participation of GVCs among Asia-Pacific countries. The findings also show the long-run relationship between GVCs and labour productivity. The long-run elasticities suggest the positive association of GVCs with labour productivity and employment. Further, the categorization of Asia-Pacific countries based on income groups reveals that improvement in labour productivity and employment outcomes is significantly greater in the case of middle-income countries. Finally, the results from panel causality infer that the direction of causality runs from GVCs to labour productivity and GVCs to employment.
Practical implications
The findings enable policymakers to formulate appropriate policies in Asia-Pacific countries to keep the momentum of increasing their participation in GVC for boosting labour productivity and employment gains.
Originality/value
To the author’s knowledge, this is the first empirical study examining the spillover effects of GVC on labour productivity and employment in case of Asia-Pacific countries.
Keywords
Acknowledgements
The author is grateful to Prof. Badri Narayan Rath for his valuable suggestions. He is also thankful to Prof. Paresh Kumar Narayan and the four anonymous reviewers for their helpful suggestions. The views expressed in the paper does not reflect the views of acknowledged individuals. All errors are own.
Citation
Jangam, B.P. (2021), "Global value chain embeddedness, labour productivity and employment in the Asia-Pacific countries", Studies in Economics and Finance, Vol. 38 No. 2, pp. 339-360. https://doi.org/10.1108/SEF-10-2019-0408
Publisher
:Emerald Publishing Limited
Copyright © 2020, Emerald Publishing Limited