Do Asian Countries Upgrade in Global Value Chains? A Novel Approach and Empirical Evidence

Gaaitzen De Vries,Zhigang Li,Quanrun Chen,Rana Hasan

doi:10.1111/asej.12166

Abstract

This paper examines the move into upstream and downstream global value chain (GVC) activities by 11 Asian countries. We use international input–output tables in combination with employment data and measure the number of workers in each country involved in manufactures GVC. Jobs are classified by business function based on occupational information, such as R&D, fabrication, logistics, sales and marketing. In most Asian countries, we find a faster employment increase in R&D and other support services relative to fabrication activities between 2000 and 2011. However, the participation in GVC and the pace of upgrading appears to differ substantially across Asian countries. We use a structural decomposition method to explore the role of trade, consumption and technological change in accounting for changes in countries' involvement in GVC.

Highlights

This paper combines multi-regional input–output (MRIO) tables with new data on jobs classified by business function
It provides a macro-perspective to explore functional upgrading by Asian countries in global value chains (GVC). It explores a quantification of trade, technology and other factors in accounting for changes in the number of workers involved in GVC
Our findings suggest that countries differ in their ability to create jobs and upgrade in GVC

Summary

Introduction

The average years of schooling of Asia’s population nearly doubled between 1970 and 2010, rising from approximately. The increasing skill level and the expansion of production networks appears at odds with the finding by Rodrik (2016) and Felipe et al (2015) of premature deindustrialization in Asia. That is, manufacturing employment shares in Asia have recently peaked at relatively low levels of economic development. How are these trends connected? A possible answer the present paper explores is that Asian economies who educate their workforce manage to upgrade in global value chains (GVC) and, increasingly undertake more upstream and downstream service activities, such as R&D (upstream) and sales and marketing (downstream), relative to fabrication activities

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