ESSAYS ON GLOBAL VALUE CHAINS AND INTERNATIONAL TRADE IN SOUTHEAST ASIAN COUNTRIES BY LINH THUY PHAM A thesis submitted to the Victoria University of Wellington in partial fulfilment of the requirements for the degree of Doctor of Philosophy Victoria University of Wellington 2022 TABLE OF CONTENTS LIST OF TABLES .iii LIST OF FIGURES. Global Value Chains and Female Employment: The Evidence from Vietnam. Global value chains and female employment in Vietnam. Potential mechanism of the impacts.
Trade unions and female employment of GVC-involved firms. Trade exposure and labour market: The evidence from Vietnam’s household data. Data and trends in Vietnam’s labour market. Trends in Vietnam’s labour market.
The WTO accession and the exogeneity of tariff reductions in Vietnam. Measurement of provincial tariffs. Labour mobility across provinces. Institutional similarity and global value chains in Southeast Asian countries.
Global value chains. 116 ii LIST OF TABLES Table 2. Distribution of firms by the mode of GVC involvement. The impacts of GVC involvement on female employment- OLS estimates.
The impacts of GVC involvement on female employment - 2SLS estimates. Mechanism of the impacts of GVCs on female employment. Trade unions and female employment of GVC-involved firms. GVC participation indicators of manufacturing industries in Vietnam, 2015.
Distribution of firms by industry. Distribution of firms by legal status. The difference in employment share by gender across industries. Results of the first-stage regression (Dependent variable: GVCit).
Robustness checks- Industrial female employment is added. Robustness checks- An indicator of innovation is added. Robustness checks- Textiles and apparel are excluded. The impacts of GVC involvement on unskilled employment.
Robustness checks- Province-year fixed effects are included. Composition of employment by sector and gender in 2004-2016 (%). The impacts of the WTO accession on the labour market outcomes. Labour market outcomes – Formal sector.
Labour market outcomes – Informal sector. Labour market outcomes – Below 30 years-old. Labour market outcomes – Above 30 years-old. Labour market outcomes – Low-skilled level.
Labour market outcomes – High-skilled level. Labour market outcomes – Rural area. Labour market outcomes – Urban area. The correlation between initial industrial characteristics and tariff reductions.
The correlation between the previous trends of imports and the tariff reductions. The correlation between initial provincial characteristics and the tariff reductions. Description of variables. Using yearly provincial tariff instead of the interaction term between the provincial tariff in 2006 and the WTO indicator.
Including average effectively applied export tariffs and FDI inflows. Including more individual characteristics. Excluding some sectors. Excluding the most apparel-intensive province in 2006.
Excluding the most basic metal-intensive province in 2006. Tariff reductions and inter-province migration. The impacts of institutional similarity on ASEAN countries’ GVCs. The impacts of institutional similarity on weak-institution ASEAN countries by partner’s institutions.
The impacts of institutional similarity on strong-institution ASEAN countries by partner’s institutions. List of countries in the sample. Gravity model with year fixed effects. Gravity model with year fixed effects and country pair fixed effects.
Robustness check: GDP similarity is included. Robustness check: SIMijt=-|RULit – RULjt|. Robustness check: One lag of institutional similarity is used as the main variable 115 iv LIST OF FIGURES Figure 2. Industrial GVC participation indicator (in percentage of total exports) and the female employment share (in percentage of total employment) in 2011, 2013, 2015, and average 2011- 2015….
The share of employment by gender across industries. The female employment share of total workforce in 2011-2015. The female employment share and the share of GVC-involved firms. Composition of total employment share of working population by gender (%).
Average hourly wages in 2004-2016. The correlation between tariff rates in 2007 and tariff reductions in 2007-2016. Trends of labour markets for low versus high tariff-exposed provinces. Tariff trends by main sectors in 2004-2016.
ASEAN’s GVC trade of Textiles & apparel, and Electrical machinery (in trillion USD) in 2000-2015. Institutional similarity indicator of ASEAN countries with their trade partners. ASEAN’s average GVC trade volume of traded sectors (in trillion USD) in 2000- 2015. A decomposition of value-added in exports extended by Borin & Mancini (2019).
108 v ABSTRACT This thesis is composed of three essays on global value chains (GVCs) and international trade in developing countries. The first essay studies to what extent global value chains are associated with the country’s female employment. Using the firm-level data of the Small and Medium Enterprise Survey in Vietnam in 2011-2015, we analyze the impacts of GVCs on female employment in 2,885 firms across 18 industries, controlling for the intensity of a firm’s GVC involvement. The empirical analysis suggests that GVCs are positively associated with total female employment, unskilled female employment (employees with no tertiary education), and production female employment, whereas the association is negative for skilled female employment (employees with tertiary education), and non-production female employment.
We also find that the share of female employment declines when GVC-involved firms increase their technology adoption (measured as the number of personal computers), suggesting that female employment in Vietnam remains largely in the low value-added stages of the production process. The second essay examines the impacts of tariff reductions after the WTO accession on the labour market across 61 provinces in Vietnam. Using individual-level data from the household survey (VHLSS) in 2004-2016, we find evidence of the variation in the impacts on employment, unemployment, labour force inactivity, and wages across provinces and genders. We measure the exposure to tariff reduction as the weighted average of all import tariffs at the province level (the weight of each industry’s import tariff at the province level is the share of employment in that industry in each province in 1999).
The probability of being employed in the traded sector declined for workers in provinces more exposed to tariff reductions. Displaced workers were likely to move from the traded to the non-traded sector for employment. The probability of unemployment declined for both male and female workers, while the probability of being labour force inactive increased for only female individuals. Male workers’ wages in provinces more exposed to the trade shocks increased after the WTO accession.
There were no significant changes in wages for female workers. The third essay investigates the association between institutional similarity and trade via global value chains of the Textiles & apparel sector and the Electrical machinery sector in Southeast Asian countries (ASEAN) in 2000-2015. We calculate the indicators of global value chains from the EORA multi-region input-output database. Focusing on the contract enforcement and rule of law dimension of institutions, our gravity-model estimates suggest that the effects of institutional similarity between each country and its respective trade partners operate through the sector-specific capital intensity and complexity pertaining to the global value chains.
In particular, vi we find a positive association between institutional similarity and the global value chain participation of the Electrical machinery sector. However, there are no significant effects of institutional similarity on the global value chains of the Textiles & apparel sector. We divide the samples into strong-institution ASEAN countries (whose the rule of law indicator is positive) and weak-institution ASEAN countries (whose the rule of law indicator is negative). We then estimate the importance of institutional similarity for the two subsamples separately.
For ASEAN countries with relatively weak institutions, the increase in institutional similarity with weak-institution trade partners is positively associated with the GVC trade of the Electrical machinery sector. However, the increase in institutional similarity with their strong-institution trade partners is negatively associated with the GVC trade of the Electrical machinery sector. We observe no significant association between institutional similarity and GVC trade for strong-institution ASEAN countries. vii ACKNOWLEDGEMENTS I am extremely grateful to my supervisors, Prof.
Yothin Jinjarak and Dr. Robert Kirkby for their expertise, guidance, support, and enthusiasm during my PhD study. Yothin Jinjarak always shared with me his experience and encouraged me to try different approaches in doing research. He also made great efforts in connecting me with external researchers through projects and seminars, which enriches my skills, network, and experience for my future career.
Robert Kirkby was always available to help. He challenged me with sharp questions on my research which enabled me to discover critical issues that need to be addressed. My gratitude extends to Victoria University of Wellington for funding me through the Victoria Doctoral Scholarship. I gratefully recognize the valuable advice of Prof.
Don Shin, Dr. Harold Cuffe, Dr. They were all happy to spend their time talking with me about my topics. They have provided me with useful suggestions.
I acknowledge the suggestions from external researchers. I am thankful to Aiko Kikkawa Takenaka, Albert Park, Donghyun Park, and Shawn W.Tan from the Asian Development Banks for their feedback on my research. Thank you to Dr. Khiem Huu Phuong, Hung Doan Quang for sharing with me their experience in using micro data in Vietnam.
I am also thankful for anonymous reviewers from the World Economy and the Journal of Development Studies for their helpful recommendations that helped me improve my research. I would like to acknowledge my colleagues at Statistics New Zealand with whom I shared my joys, obstacles, and progress in my PhD journey. Special gratitude to my manager, Bryan Downes who motivated me during the last few months of my study. I am really delighted to be a part of his team.
This thesis is dedicated with love to my parents, my husband, and my daughter. I am grateful for their unconditional, endless, and loving support. Introduction Southeast Asia (ASEAN) is a dynamic and an integral part of the world manufacturing production. The growing importance of the region in the global production network is the result of its long-term trade-oriented development strategy.
ASEAN is one of the top four exporting regions in the world, along with the European Union, North America, and China/Hong Kong 1. Focusing on the interplay between globalisation and socioeconomic issues, this thesis comprises trade policy, global value chains, and economic development in five chapters. The current chapter provides an overview. Chapter 2 studies the association between global value chains and female employment in Vietnam.
Chapter 3 investigates the impacts of tariff reductions after the WTO accession on the labour market in Vietnam. Chapter 4 examines the association between institutional similarity and global value chains of Southeast Asian countries. Conclusion is given in Chapter 5. Chapter 2 is titled “Global Value Chains and Female Employment: The Evidence from Vietnam” and has been published in The World Economy Journal (Pham & Jinjarak, 2022).
Drawn on the task trade theory of Grossman & Rossi-Hansberg (2012) which explains the pattern of specialization of tasks in the production process, we examine the impacts of global value chains on female employment across levels of skills and occupations, taking Vietnam as a case study. The chapter focuses on GVCs of small and medium enterprises (SMEs), using Vietnam’s Small and Medium Enterprise Survey in 2011-2015. We rely on OECD-UNIDO (2019) and Veugelers et al. (2013) to measure the involvement of Vietnamese firms in global value chains focusing on their trade and domestic production linkages.
Our empirical findings indicate that GVCs are positively associated with the female share of total employment, unskilled employment (employees with no tertiary education), production workforce and negatively associated with the female share of skilled employment (employees with tertiary education), non-production workforce. By explaining the mechanism of the impacts, we discover that GVC-involved firms employ a smaller share of female employment across skill levels and job positions when they increase their adoption of technology. Our findings support the task trade theory: developing countries like Vietnam have a comparative advantage in labor-intensive industries, thereby 1 https://www.com/~/media/McKinsey/Industries/Public%20Sector/Our%20Insights/Understanding%20AS EAN%20Seven%20things%20you%20need%20to%20know/Understanding%20ASEAN%20Seven%20things%20y ou%20need%20to%20know.pdf 1 specializing in the manual tasks that require a large number of female workers with dexterity or “nimble fingers.” Consequently, GVC-involved firms prominently feature a higher female share of unskilled, production workers, and a lower female share of skilled, non-production workers. Chapter 3 is titled “Trade exposure and labour market: Evidence from Vietnam’s household data”.