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A Regional Trade Agreements is expected to increase the intra-regional trade volume and welfare of countries. We argue that a formation of Regional Trade Agreements is an endogenous process in the case of India in the model incorporating both inter-and intraindustry trade. Our Results suggest that a Regional Trade Arrangement is encouraging trade only when the partner countries are already sharing great trade volume. For India, its engagements with the Association of Southeast Asian Nations and East Asia per se are unlikely to boost trade.

The fragmentation of production due to vertical disintegration has profusely impacted growth in world trade via vertical specialisation in production and trade. This article is purported to examine domestic and import contents in exports in the manufacturing sector of India, and a few select countries in Asia. We have used the World Input–Output Database (WIOD) to estimate the domestic and foreign value-added shares of export. The period of our study is from 2000 to 2014. Our results pertaining to the aggregate manufacturing industry of India reveal that while, on the one hand, the domestic value-added contents of export have fallen significantly, the foreign value-added contents of export, on the other hand, have increased significantly over time. We have also conducted disaggregated industry-level analyses, which show that there is a wide variation in the degree of vertical integration in trade. The cross-country analysis reveals that the foreign value-added shares in total manufacturing export increased for developed Asia in 2014 over 2000. In emerging and developing Asia, it either has increased or remained stagnant. This scenario indicates a larger backward linkage of the manufacturing sector in the global value chain (GVC) across countries. Here, we have primarily focussed on the six key manufacturing industries viz. Food, Textiles, Chemicals, Basic Metals, Fabricated Metals and Motor Vehicles for cross-country industry-level analysis. Industry-level heterogeneity is highly prevalent in Asia in terms of their participation in GVC.

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Contractual employment is an increasing phenomenon in the in-house production while informal workers are available outside at low cost. The obvious question is: are they more productive? To enquire this, the present paper examines the elasticity and productivity differential between direct and contract workers using the three-digit industrial data for major Indian states during 1998–2006. A simple theoretical exercise suggests that when direct and contract workers are employed respectively for core and peripheral activities within in-house production, the use of contract workers could rise in response to technological change even if direct workers are more productive and decline. We assume that a firm can undertake core activities by subcontracting out in place of using direct employment. Our empirical results suggest that both elasticity and productivity of contract workers have been lower than those of direct workers, even when the share of contract workers is highly explained by the capital–output ratio. We argue that the contract workers are less productive because they do not receive direct benefits from the technological upgradation in core in-house activities. While the technological upgradation can replace direct workers and subcontracting, the contract workers to be used for peripheral in-house activities can increase along with in-house production.