Authors: Chandrima Sikdar; Biswajit Nag
Addresses: School of Business Management, Narsee Monjee Institute of Management Studies, V.L. Mehta Road, Vile Parle (W), Mumbai 400056, India ' Indian Institute of Foreign Trade, IIFT Bhawan, B-21, Qutab Institutional Area, New Delhi 110 016, India
Abstract: Domestic production in Indian manufacturing sector failed to generate adequate employment opportunities but jobs supported by exports from the sector has been on the rise. The current study examines the employment effect of India-ASEAN Free Trade Agreement (IAFTA) on Indian manufacturing sector. Of the different FTAs signed by India, IAFTA involves one of the largest trade volumes. Using CGE modelling framework of GTAP database the study conducts simulations by calibrating the trade liberalisation scenario as of 2018 between India and the ASEAN countries. IAFTA fetches employment growth in manufacturing. But the beneficiaries of this gain are the unskilled labour who benefit both in terms of greater employment and higher wages. Higher usage of unskilled labour in conjunction with increased imported inputs also fetches productivity gains for the country. However, skilled labour employment is hit. Overall impact of IAFTA on manufacturing sector remains positive due to increased trade and employment gains.
Keywords: trade; employment; manufacturing; India-ASEAN FTA; CGE modelling; GTAP.
International Journal of Economic Policy in Emerging Economies, 2020 Vol.13 No.6, pp.691 - 710
Received: 20 Dec 2018
Accepted: 27 Dec 2019
Published online: 27 Nov 2020 *