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Begin New Search Topic Global Value Chains Political Geography Asia

21. Enhancing Inter-Korean Economic Cooperation through International Cluster: Implications for the Kaesong Industrial Complex

Author:
Hwy-Chang Moon and Wenyan Yin
Publication Date:
01-2020
Content Type:
Journal Article
Journal:
Revista UNISCI/UNISCI Journal
Institution:
Unidad de investigación sobre seguridad y cooperación (UNISCI)
Abstract:
In spite of the high potential of economic cooperation between the two Koreas, political tensions and international sanctions have discouraged the sustainability of economic outcomes. To overcome these political challenges, this article introduces two frameworks of international cluster and global value chains (GVCs) for developing effective and sustainable economic exchanges. These frameworks are applied to the case of the Kaesong Industrial Complex (KIC) and analysis of the reasons for its failure is provided. This article then suggests two strategic solutions for the KIC: minimizing the role of North Korea to a few GVC activities, and encouraging more foreign companies’ investment. Unlike preceding studies that overemphasize the political challenges in inter-Korean economic relationships, we emphasize that an effective approach through internationalization can not only contribute to sustainable economic development but also ease political tensions.
Topic:
Sanctions, Business, Economic Cooperation, and Global Value Chains
Political Geography:
Asia, South Korea, and North Korea

22. The Impact of Global Value Chain Integration on Wages: Evidence from Matched Worker-Industry Data in Thailand

Author:
Sasiwimon W. Paweenawat
Publication Date:
08-2019
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
Using a two-stage estimation of matched worker-industry data from 2000 to 2011, this study investigates the impact of global value chain (GVC) integration on wages and the skill premium in 32 industries in Thailand, a country with recent heavy involvement in GVCs. This study employs foreign value added in both final and intermediate goods exports as a proxy for the degree of industry integration in GVCs and applies a panel fixed effects estimation on constructed panel data to investigate its relationship with wages. The main finding indicates that a higher level of industry integration with GVCs leads to higher wages and a higher skill premium, confirming the positive effect of GVC involvement on wages and the complementary effect of high demand for skilled workers in GVC-oriented industries in Thailand. Workers in industries with positions close to the end of the value chain (downstream position) will earn a higher wage than those working in the upstream position. These results have significant policy implications. The Thai government should not only attempt to increase industry involvement in GVCs overall, but also aim to lift industries to higher positions in the GVC to gain the most benefits for Thai workers and the country overall.
Topic:
Labor Issues, Inequality, Wage Subsidies, and Global Value Chains
Political Geography:
Asia and Thailand

23. Value Added Exports and the Local Labour Market: Evidence from Vietnamese Manufacturing Firms

Author:
Duc Anh Dang
Publication Date:
08-2019
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
The formation of global value chains (GVCs) has reshaped production processes across countries. This paper investigates the relationship between GVCs and firms’ employment by using panel data on Vietnamese small manufacturing firms for 2005–2011. The results suggest that increased foreign value added in exports results in higher wages, increased productivity, and a greater share of production workers in domestic small and medium-sized enterprises. In addition, it brings about a lower share of professionals and makes smaller firms retrain their existing workers. At the same time, domestic value added in the export of intermediate products has negative impacts on employment and increases wages, particularly in medium-sized firms. All of these may come from the increased competition for labour from larger firms.
Topic:
International Cooperation, Labor Issues, Trade, and Global Value Chains
Political Geography:
Asia and Vietnam

24. Global Value Chains and Formal Employment in Viet Nam

Author:
Trinh Q. Long, Le T. Trang, and Matthias Helble
Publication Date:
09-2019
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
This study investigates the impacts of integration into global value chains (GVCs) on formal and informal employment in Viet Nam. Utilising the Viet Nam Household Living Standard Surveys and the Organisation for Economic Co-operation and Development’s Trade in Value Added database (in 2010, 2012, and 2014), we examine how GVCs’ engagement affects the share of formal employment (through a fixed effects estimator) and the likelihood of being a formal employee (through a probit estimator). Our estimation results show a positive relationship between the level of GVC engagement and the share of formal employment at the provincial level. While the GVC participation index (measured as the sum of backward and forward participation indices) does not have a statistically significant effect on the share of formal employment at the provincial level, each component of GVC participation (i.e. backward and forward participation) has effects at the provincial level in different directions. At the individual level, we find that provincial GVC engagement is also positively correlated with individuals’ likelihood of being formally employed. However, the probability of being a formal employee (individual) is not directly affected by GVC engagement at the provincial level, but is indirectly affected through the local labour market. Such results indicate that individual and household characteristics are robust determinants of being employed as a formal employee.
Topic:
Labor Issues, Employment, and Global Value Chains
Political Geography:
Asia and Vietnam