Skill distribution and comparative advantage: a comparison of China and India

Asuyama Yoko

No 277, IDE Discussion Papers from Institute of Developing Economies, Japan External Trade Organization(JETRO)

Abstract: This paper empirically examines the different comparative advantages of two emerging economic giants, China and India, in relation to the different skill distribution patterns in each country. By utilizing industry export data on China and India from 1983 to 2000, we find that a country with a greater dispersion of skills (i.e., India, especially in the earlier years) has higher exports in industries with shorter production chains, whereas a country with a more equal dispersion of skills (i.e., China, especially in the later years) is found to have higher exports in industries with longer production chains. The causal relationship is fairly robust across different specifications. This empirical evidence supports our assumption that the likely mechanism for these results is the negative impact of low-skilled workers on input quality, which accumulates and becomes larger as the length of production chains and the proportion of low-skilled workers in the economy increase.

Keywords: China; India; Manufacturing industries; Manufactures; Labor productivity; Labor conditions; International competition; Exports; Comparative advantage; Production chains; Sequential production; Skill distribution (search for similar items in EconPapers)
JEL-codes: F14 F16 J2 (search for similar items in EconPapers)
Date: 2011-02
New Economics Papers: this item is included in nep-dev, nep-eff, nep-int, nep-lab and nep-tra
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Published in IDE Discussion Paper = IDE Discussion Paper, No. 277. 2011-02

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