Global Value Chains in India and Their Impact on Gender Wage Disparity

Published date01 November 2022
Date01 November 2022
Subject MatterArticles
Global Value Chains in
India and Their Impact
on Gender Wage
Kaveri Deb1
Trade across countries in the world has assumed a new dimension with the
emergence of global value chains (GVCs). GVCs are associated with trade in
intermediate parts and components being processed and assembled in multiple
countries. The current article analyses the impact of India’s participation in GVCs
on the wage gap between male and female workers. Dearth of studies exploring
this issue in the Indian context is a motivation for the current research. India’s
participation in GVCs is measured by two indicators—domestic value added in
intermediate goods as a share of gross exports (DVAXINT) and foreign value-
added share of gross exports (FVAX). Both pooled and panel regression analyses
based on secondary sources of data suggest that none of the indicators of GVCs
have been helpful in improving the relative wages of female workers in India.
JEL Codes: C33, F14, F16, F23
Global value chains, backward linkage, forward linkage, gender wage gap
With the increase in ow of inter-country foreign direct investment (FDI) and as-
sociated enhanced role of multinational companies, global production networks
1 Department of Humanities and Social Sciences, Indian Institute of Information Technology Guwahati,
Corresponding author:
Kaveri Deb, Department of Humanities and Social Sciences, Indian Institute of Information Technology
Guwahati, Bongora, Guwahati 781015, Assam, India.
Foreign Trade Review
57(4) 452–472, 2022
© 2021 Indian Institute of
Foreign Trade
Reprints and permissions:
DOI: 10.1177/00157325211024003
Deb 453
have gained importance in world trade. Hence, the current world trade scenario is
no longer based on exchange of nal products between countries. Now multiple
countries take part in producing a nal product, with each country involved in
adding value to the intermediate product imported. Hence, as we see now, inter-
country trade in intermediates are increasing, and they constitute the main drivers
of growth in world goods trade (Feenstra, 1998; Meng et al., 2012). Lower trade
barriers on intermediate goods have also contributed to the prevailing world trade
scenario (Miroudot et al., 2009). So, we are living in a world where production is
internationalised, with rms in every country organising and coordinating cross-
border production arrangements through established external networks (Raju,
2014). This phenomenon of internationalisation of production structure has been
described in various alternative terms in the literature, like global value chains
(GVCs)/fragmentation of production/outsourcing/vertical specialisation/value-
added trade.
The issue of global production networks and their consequences for the world
trade has been extensively analysed in the literature (Ando & Kimura, 2005;
Baldwin & Robert-Nicoud, 2014; Grossman & Rossi-Hansberg, 2008; Hummels
et al., 2001; Kimura et al., 2007; Markusen & Venebles, 2007; Ng & Yeats, 2001;
Yi, 2003). The matter of concern for the trade economists is the impact of such
changing world trade scenario on the macroeconomic indicators such as output,
prices, employment, etc., in the participating countries. Accordingly, significant
volumes of literature can be identified that have tried to determine the impact of
GVCs on the labour markets of participating countries by means of extensive data
analyses. Some of these studies have investigated the employment-generating
prospects of GVCs (Banga, 2016; Lopez-Acevedo & Robertson, 2016; Shepherd
& Stone, 2013). Some of the other studies have explored the role of GVCs in
increasing the demand for skilled workforce (Bertulfo et al., 2019; Calì &
Hollweg, 2016; Crinò, 2012; Farole et al., 2018; Fernandez-Stark et al., 2010;
Iberahim, 2013; Pathikonda & Farole, 2017; Taglioni & Winkler, 2016). A few
others have tried to analyse the impact of GVCs on workers classified on the basis
of gender (Ahmed, 2013; Bamber & Fernandez-Stark, 2013; Barrientos, 2014;
Basi, 2009; Bhattacharya & Rahman, 1999; Christian, 2013; Christian et al.,
2013; Fontana, 2012; Frederick & Staritz, 2012; McKay, 2006; Shepherd &
Stone, 2013; Silvander, 2013;). India has also been an active participant in GVCs,
with possibilities for its enhanced role due to the initiation of trade war between
the USA and China. Further, India is characterised by a labour market with dispa-
rate employment and payment structure for workers classified on the basis of
gender, as recognised in existing literatures (Agrawal, 2014; Bhattacharjee et al.,
2015; Bhaumik & Chakrabarty, 2008; Poddar & Mukhopadhyay, 2019). Since
there is a pressing need across the world to move towards a gender-neutral soci-
ety, the consequences of the changing world trade scenario on male and female
workers is a matter worthy of consideration for the Indian policymakers.
GVCs may increase or decrease the relative wages of female workers, depend-
ing on the requirements of specific kinds of skills, skill composition of workers and
the policies (discriminatory or non-discriminatory against female workers) adopted
by the participating firms. According to Jenkins (2005), wages and working condi-
tions of women employees may be better in GVCs than for those employed in

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