Employment effects of joining global production networks: Does domestic value-added matter?

Durongkaveroj, Wannaphong

doi:10.35188/unu-wider/2021/002-3

Cited by 2 publications

(2 citation statements)

References 39 publications

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“…Another example is what Antonelli and Feder (2021) call pecuniary knowledge externalities (PKE), i.e., technological externalities caused by pecuniary externalities. According to Durongkaveroj (2021), the effect of demand in downstream sectors favours increased levels of division of labour in upstream sectors. The division of labour raises the levels of expertise and may cause pecuniary externalities, such as lower prices for capital goods and intermediate inputs.…”

Section: Technological and Pecuniary Externalitiesmentioning

confidence: 99%

FDI and Firm Productivity: A Comprehensive Review of Macroeconomic and Microeconomic Models

Santos

2023

Economies

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This paper reviews the literature on foreign direct investment (FDI), productivity, and technology upgrading, with a focus on macroeconomic and microeconomic models. It compares the performance of various models used to study FDI and its effects on firms’ productivity, via skill and technology upgrading, offshoring, institutional quality, and other related factors. This review highlights the differences and similarities between macroeconomic and microeconomic models, their empirical strategies, and their ability to provide a comprehensive understanding of the mechanisms through which FDI affects productivity and other variables. The empirical literature on the impact of FDI on the productivity of local firms is derived from association studies, which use a neoclassic production function and an augmented Solow-type equation. These models have been shown to be inadequate in capturing the dynamic and complex nature of FDI and the associated externalities, particularly vertical externalities. This paper identifies three criticisms of the literature on pecuniary externalities, including a lack of models that focus specifically on the mechanism of forward linkages, inadequate measures to assess linkage effects, and the failure to include crucial determinant factors in empirical models. Overall, this paper calls for more comprehensive and nuanced models that incorporate the dynamic and complex nature of FDI and its externalities.

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Section: Technological and Pecuniary Externalitiesmentioning

confidence: 99%

FDI and Firm Productivity: A Comprehensive Review of Macroeconomic and Microeconomic Models

Santos

2023

Economies

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“…Though globalization (in the forms of trade liberalization, foreign direct investment and global valuechain) is argued to raise the level of income and foster the national economy, its specific effect on labour and its overall distributional impact is controversial, given that not all groups of society can take advantage of its benefits (Harrison et al 2011, Dorn et al 2018Lee et al 2019;Lee et al 2020;Haseeb et al 2020). A limited number of studies, however, attempted to assess the impact of globalization on the labour share (Harrison 2002;Guscina 2006;EC 2007;IMF 2007;Guerriero & Sen 2012;Suzuki et al 2019;Hu et al 2020;Chortareas & Noikokyris 2021;Durongkaveroj 2022). These studies, using computed indices of labour share in GDP, showed a declining trend of the labour share and explored the factors behind the trend.…”

Section: Introductionmentioning

confidence: 99%

What Does Data on Functional Income Distribution tell us about Trends in and Correlates of Income Inequality in The Asia-Pacific?

2022

JEM

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This paper presents an analysis of the trend and patterns of the share of labour in GDP, the gap between wage and productivity, and inequality with a focus on Asia-Pacific countries for the period between 2004 and 2017. Descriptive analysis confirms a downward trend in labour income shares during the study period in most of the countries in the Asia-Pacific. Our analysis also shows that majority of the Asia-Pacific countries additionally witnessed a rise in the gap between labour productivity and wage, defined as the shortfall of wage from labour productivity as a percentage of wage. Furthermore, inequality, measured through the income Gini index also increased in these countries. Panel econometric regression results suggest that trade openness and FDI have a negative association with the labour share in GDP in the Asia-Pacific countries while being positively associated with the gap. Economic growth and structural transformation processes have also not been favourable in raising the labour share in GDP. Among other findings, technological development has not been labour-friendly in most of these countries. Non-agricultural employment share in total employment has a negative association with the labour share in GDP and is positively associated with the gap. Yet our analyses have confirmed that the reduction in labour share in income is associated with rising inequality in the Asia-Pacific countries. We conclude by discussing the role of two related major instruments of government policies --revenue generation, and public expenditure on social sectors --for addressing challenges related to widening inequality in the region.

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Employment effects of joining global production networks: Does domestic value-added matter?

Abstract: This study has been prepared within the UNU-WIDER project Structural transformation-the old and new paths to economic development.

Cited by 2 publications

References 39 publications

FDI and Firm Productivity: A Comprehensive Review of Macroeconomic and Microeconomic Models

FDI and Firm Productivity: A Comprehensive Review of Macroeconomic and Microeconomic Models

What Does Data on Functional Income Distribution tell us about Trends in and Correlates of Income Inequality in The Asia-Pacific?

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