Trade liberalisation and manufacturing employment in developing countries

Matthias Busse, Stanley Kojo Dary and Jan Wüstenfeld

Structural Change and Economic Dynamics, 2024, vol. 70, issue C, 410-421

Abstract: The manufacturing sector has played an important role in the structural transformation process in the developing world by providing jobs and income opportunities. Using data from 131 developing countries from 1991 to 2020, we estimate the impact of trade liberalisation on manufacturing employment using panel fixed-effects and instrumental variable regression approaches. We find that trade liberalisation – on average – has harmed manufacturing employment in developing countries. There are considerable differences at the regional level; the impact has been most substantial in sub-Saharan African and Latin American countries. At least in these regions, trade liberalisation has contributed to deindustrialisation. Policies that improve labour productivity in manufacturing will increase the competitiveness of manufacturing firms in these countries in the face of growing trade globalisation.

Keywords: Trade liberalisation; Manufacturing employment; Developing countries (search for similar items in EconPapers)
JEL-codes: F13 F14 F66 O24 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:streco:v:70:y:2024:i:c:p:410-421

DOI: 10.1016/j.strueco.2024.05.003

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