Determinants of Domestic Value Added in Exports: Empirical Evidence from India’s Manufacturing Sectors

2021 ◽  
pp. 097215092110501
Author(s):  
Sakshi Aggarwal ◽  
Debashis Chakraborty ◽  
Ranajoy Bhattacharyya
Keyword(s):  
Value Chain ◽  
Agricultural Sector ◽  
Manufacturing Sector ◽  
Value Added ◽  
Foreign Firms ◽  
Skilled Workers ◽  
Positive Role ◽  
Empirical Results ◽  
Skill Intensity ◽  
Domestic Capital

Over the last decade, trade policy reforms have significantly influenced the internationalization of Indian manufacturing firms, leading to deeper participation of the country in global value chains (GVCs) and international production networks (IPNs). With the growing participation of foreign firms in the value chain, the domestic value-added (DVA) content embodied in Indian exports have displayed a declining trend. Recently, in 2020, India has decided to launch the ‘Atmanirbhar (self-reliant) Bharat Abhiyan’, which, in principle, aims to consolidate the manufacturing sector, leading to increasing DVA embodied in exports (DVA-content), apart from employment generation. The current article attempts to analyse the drivers of India’s DVA in exports for select manufacturing industries over 2000–15 by using the OECD trade in value added (TiVA) database. The empirical results reveal that sectoral DVA content is positively influenced by both domestic capital and foreign direct investment (FDI), and labour skill intensity, but negatively influenced by the presence of unskilled workers. Moreover, FDI inflows in sectors characterized by high skill-intensity and high-relative growth rate play a crucial role in influencing DVA content. Finally, the presence of larger and more capital-intensive firms is found to be a major driver of DVA. On the policy front, therefore, the empirical results underline that export promotion policies alone will not be able to resolve employment worries, a major concern in India, as vast numbers of unskilled and low-skilled workers trapped in the agricultural sector or working in unorganized and micro-industries fail to figure in the country’s export value addition. A concerted effort towards labour skill enhancement as well as technology transfer is necessary for exports to play a more positive role.

scholarly journals Modeling the impact assessment of agricultural sector on economic development as a basis for the country’s investment potential

2019 ◽  
Vol 16 (3) ◽  
pp. 229-240
Author(s):  
Alina Bukhtiarova ◽  
Arsen Hayriyan ◽  
Victor Chentsov ◽  
Sergii Sokol
Keyword(s):  
Economic Growth ◽  
Economic Development ◽  
Foreign Direct Investment ◽  
Direct Investment ◽  
Agricultural Sector ◽  
Negative Impact ◽  
Manufacturing Sector ◽  
Value Added ◽  
The Cost ◽  
The Impact

In the context of countries integration into the world economic space, agricultural sector is one of the priorities and strategically important sectors of the national economy. Development of instruments aimed to increase investment potential of this sector is therefore an important component of the country’s economy growth. The article proposes a science-based model of the impact of the agricultural sector on the economic development level of countries trying to move towards European integration.It was found that the employment rate (+58.4) has the largest influence on the rate of GDP change in the studied group of countries (Ukraine, Moldova, Georgia, Armenia). The impact of the gross value added of the manufacturing sector on its economic growth is positive (+44.6). The negative foreign direct investment ratio in the model (–40.3) may be due to the fact that the indicator in the studied countries is still largely influenced by the intervention of the state mechanism, significant uncertainty and risk, which is a deterrent to the overall economic development. An important result of the study was that foreign direct investment had a negative impact on economic growth in developing countries. Further development of the investment potential of a country’s agricultural sector provides for a radical acceleration of scientific and technological progress and, on this basis, a reduction in the cost of a unit of agricultural products and food and an increase in their competitiveness in the domestic and world markets.

scholarly journals Sustainable Management of a Korean Firm: Transformation of the Value Chain in Cheil Industries Inc.

2012 ◽  
Vol 13 (2) ◽  
pp. 113-133
Author(s):  
Woo Jun
Keyword(s):  
Corporate Culture ◽  
Value Chain ◽  
Sustainable Management ◽  
Current Knowledge ◽  
Manufacturing Sector ◽  
Value Added ◽  
The Past ◽  
Knowledge Based ◽  
Knowledge Based Economy ◽  
Korean Firm

By using a new conceptual model of ‘Smile Curve’, this research strives to examine how Cheil Industries Inc. (CI) has been transforming its value chain to create its competitive advantage. According to the results, CI’s value-added structure in the past (conventional industrialization economy) was heavily reliant on the manufacturing sector, and therefore, the profit graph shaped an ‘Upside-down Shape of U’ indicating that production and manufacturing are the most value-added fields. However, CI’s current (knowledge-based economy) graph shows a ‘U with Fluent Curve’ indicating that R&D, human resources, corporate culture, firm infrastructure, manufacturing, logistics and marketing are simultaneously creating value-added for the company. This implies that CI’s value-added source is more diversified to fit with knowledge-based economy.

scholarly journals Potensi dan Prospek Industri Kecil

The Winners ◽  
2006 ◽  
Vol 7 (2) ◽  
pp. 164
Author(s):  
Dedi Walujadi
Keyword(s):  
Gross Domestic Product ◽  
Empirical Evidence ◽  
Agricultural Sector ◽  
Manufacturing Sector ◽  
Value Added ◽  
Manufacturing Industries ◽  
Domestic Product ◽  
Small Scale ◽  
Main Contributor ◽  
Economic Contribution

The manufacturing sector has retained its importance in the Indonesian Economy. Since 1990 it has surpassed the agricultural sector as the main contributor to the Gross Domestic Product (GDP). Article analyses strenght and weaknesses of the small-scale manufacturing industries (SSIs). By ussing the economic contribution approach and the framework proposed by Pyke, based on 2003 data provided by BPS statistics Indonesiathe study investigates the SSIs performance in relation to their economic contribution, the collective efficiency, constant innovation and economic ofscope strategy. It is conluded that Pyke’s framework was not apply since SSIs facing lack of social infrastructures and knowledge, and mostly less educated compared with the larger one. The empirical evidence also shows that in terms of value added and labor absorption, its share less than 1 % and 16 % respectively of the whole of industrialsectors. 

Evaluation of the impact of institutional and structural changes on the development of the Russian agricultural sector

2019 ◽  
pp. 39-58 ◽  
Author(s):  
Vasily Ya. Uzun ◽  
Nataliya I. Shagaida
Keyword(s):  
Structural Changes ◽  
Agricultural Sector ◽  
Value Added ◽  
Negative Consequences ◽  
Positive Role ◽  
Agricultural Enterprises ◽  
Agricultural Employment ◽  
Agricultural Organizations ◽  
The Impact ◽  
Number Of Individuals

The article analyzes the most important institutional and structural changes in the agriculture of Russia in 2006—2016. The research has shown that the policy of reducing state participation in agricultural enterprises, increasing the concentration of property and management in the hands of a smaller number of individuals, growing share of agricultural organizations and farmers in the production of agricultural products, as well as the state support of agricultural holdings have played a positive role in the development of production. Structural changes in land use and land ownership of agricultural organizations are taking place. An attempt has been made to evaluate these changes. As the research has revealed, structural changes that ensured the growth of production had some negative consequences: the expansion of the activities of agricultural holdings led not only to the reduction in agricultural employment, but also to the decline of the rural population; the owners and managers rather than workers have become the main beneficiaries of the growth of revenues and incomes in organizations and redistribution of value added.

scholarly journals Integration in Manufacturing Trade in Asia: A Cross-country Scenario with Special Reference to India

2020 ◽  
Vol 2 (1) ◽  
pp. 27-43
Author(s):  
Anusree Paul ◽  
Alokesh Barua
Keyword(s):  
Value Chain ◽  
Manufacturing Industry ◽  
Manufacturing Sector ◽  
Value Added ◽  
Motor Vehicles ◽  
Industry Level ◽  
Vertical Disintegration ◽  
Cross Country ◽  
Fragmentation Of Production ◽  
The One

The fragmentation of production due to vertical disintegration has profusely impacted growth in world trade via vertical specialisation in production and trade. This article is purported to examine domestic and import contents in exports in the manufacturing sector of India, and a few select countries in Asia. We have used the World Input–Output Database (WIOD) to estimate the domestic and foreign value-added shares of export. The period of our study is from 2000 to 2014. Our results pertaining to the aggregate manufacturing industry of India reveal that while, on the one hand, the domestic value-added contents of export have fallen significantly, the foreign value-added contents of export, on the other hand, have increased significantly over time. We have also conducted disaggregated industry-level analyses, which show that there is a wide variation in the degree of vertical integration in trade. The cross-country analysis reveals that the foreign value-added shares in total manufacturing export increased for developed Asia in 2014 over 2000. In emerging and developing Asia, it either has increased or remained stagnant. This scenario indicates a larger backward linkage of the manufacturing sector in the global value chain (GVC) across countries. Here, we have primarily focussed on the six key manufacturing industries viz. Food, Textiles, Chemicals, Basic Metals, Fabricated Metals and Motor Vehicles for cross-country industry-level analysis. Industry-level heterogeneity is highly prevalent in Asia in terms of their participation in GVC.

scholarly journals A Probe into the Status of the Oil Palm Sector in the Malaysian Value Chain

Economies ◽  
2021 ◽  
Vol 9 (3) ◽  
pp. 106
Author(s):  
Fathin Faizah Said ◽  
Sharifah Nur Ainn Syed Roslan ◽  
Mohd Azlan Shah Zaidi ◽  
Mohd Ridzwan Yaakub
Keyword(s):  
Palm Oil ◽  
Value Chain ◽  
Oil Palm ◽  
Manufacturing Sector ◽  
Value Added ◽  
Network Visualization ◽  
The European Union ◽  
Input Output ◽  
Input Factor ◽  
High Level

A ban on palm oil imports by the European Union has become a problematic issue, especially for palm oil producers’ countries. Oil palm has been widely used in many sub-sectors, and any changes in the production side may affect many sectors that use oil palm as an input factor in their productions. This study explores the chain of the oil palm sector on the other sub-sectors in Malaysia by using a value-added multiplier method and network modeling. The study focuses on the specific oil palm sub-sector and oils and fats sub-sector in the Malaysian economic structure based on the Malaysian Input-Output 2015 Table. Network visualization and all the analyses involving network methods were developed and performed using UCINET and GEPHI software. The value-added multiplier results explained that the net value between output multiplier and import multiplier is vital to depict the real impact of net resources used as an input factor in the oils and fats and oil palm sub-sectors. The high-density value level shows that the Malaysian oil palm sector has high connectivity in the economic system. From the network visualization analysis, the oils and fats sub-sector has a high level of integration with other sectors within the network. Meanwhile, the oil palm sub-sector categorized in the periphery structure group has a low level of integration in the input-output network. This is due to the high value-added demand for oil palm in the oils and fats sub-sector in the manufacturing sector. Overall, most of the sub-sectors in Malaysia are highly interconnected due to the high clustering ratio. Therefore, ensuring sufficient oil palm production is vital for sustainable production of other sub-sectors.

scholarly journals The Impact of Global Value Chain Participation on Sectoral Growth and Productivity

2020 ◽  
Vol 12 (12) ◽  
pp. 4848
Author(s):  
Halit Yanikkaya ◽  
Abdullah Altun
Keyword(s):  
Productivity Growth ◽  
Value Chain ◽  
Manufacturing Sector ◽  
Generalized Method Of Moments ◽  
Value Added ◽  
Output Growth ◽  
Global Value Chain ◽  
Tfp Growth ◽  
Parameter Heterogeneity ◽  
The Impact

This study investigates the impact of participation in global value chains (GVCs) on sectoral value-added and total factor productivity growth (TFP) for two different time periods of 1995–2011 and 2005–2015. In addition to the commonly used participation indices, we also calculate lesser known measures of backward and forward participation indices, as suggested by the OECD. Our Generalized Method of Moments (GMM) estimations for the full sample indicate that sectors with higher GVC participation experience much higher output and TFP growth, especially for the period 1995–2011. Overall, our results imply that there have been decreasing gains from GVC participation in the later period. Note that our estimates for both output and TFP growth are very much similar. This means that participation in GVCs promotes not only output growth but also productivity growth across sectors. Considering the parameter heterogeneity, we repeat our estimations for manufacturing and services separately. Although for the earlier period both the manufacturing and services sectors benefit from more participation in terms of higher output and productivity growth, only the manufacturing sector experiences higher productivity growth from more participation for the period 2005–2015. Relatively less significant and smaller estimates for the later period covering the latest global crisis imply that participation in GVCs fails to bring satisfactory gains to countries and sectors.

Some Aspects of the Formation of Export Infrastructure in the Agricultural Sector of the Indian Economy

2020 ◽  
pp. 90-96
Author(s):  
A.G. Paptsov ◽  
◽  
N.A. Medvedeva ◽  
Keyword(s):  
Value Chain ◽  
Agricultural Sector ◽  
Value Added ◽  
Global Market ◽  
Agricultural Products ◽  
Added Value ◽  
Agricultural Export ◽  
Export Policy ◽  
The World ◽  
The Creation

The article analyzes the production of agricultural products in India for the period 2000-2018. - as the basis for the formation of export potential, which has shown an increase in production in almost all major types of agricultural products in India. Today India is a major exporter of agricultural products and foodstuffs and ranks sixth in the ranking of the 10 largest exporters in the world. Its share in the global market in 2018 was 2.2%. ($ 42 billion). India intends in the future to significantly increase the volume of supplies of agricultural products to the world market - up to 100 billion dollars. In this regard, India has developed a new export policy aimed at developing export potential through the production of high value-added products and the development of export infrastructure, which will increase the competitiveness of Indian products in the global food market. The article discusses some aspects of export policy. Particular attention is paid to the formation of clusters and agricultural export zones, the creation of which will attract foreign investment both in agricultural production and in the development of infrastructure in India, and ensure the production of high quality products. An important point in the formation of clusters is the involvement of farmers in the value chain through the creation of Farmer Producer Organizations (FPOs), designed to help smallholders overcome shortcomings in production and expand the presence of farmers in foreign markets. The article reflects the infrastructure to support exports and stimulate the production of export agricultural products with high added value. The issues of mutual trade in agricultural products between India and Russia and some directions of its development are considered.

scholarly journals Slicing Up Global Value Chains

2014 ◽  
Vol 28 (2) ◽  
pp. 99-118 ◽  
Author(s):  
Marcel P. Timmer ◽  
Abdul Azeez Erumban ◽  
Bart Los ◽  
Robert Stehrer ◽  
Gaaitzen J. de Vries
Keyword(s):  
Value Chain ◽  
Production Systems ◽  
Value Added ◽  
Global Value Chains ◽  
Value Chains ◽  
Skilled Labor ◽  
Skilled Workers ◽  
Strong Shift ◽  
Starting Point ◽  
Fragmentation Of Production

In this paper, we “slice up the global value chain” using a decomposition technique that has recently become feasible due to the development of the World Input-Output Database. We trace the value added by all labor and capital that is directly and indirectly needed for the production of final manufacturing goods. The production systems of these goods are highly prone to international fragmentation as many stages can be undertaken in any country with little variation in quality. We seek to establish a series of facts concerning the global fragmentation of production that can serve as a starting point for future analysis. We describe four major trends. First, international fragmentation, as measured by the foreign value-added content of production, has rapidly increased since the early 1990s. Second, in most global value chains there is a strong shift towards value being added by capital and high-skilled labor, and away from less-skilled labor. Third, within global value chains, advanced nations increasingly specialize in activities carried out by high-skilled workers. Fourth, emerging economies surprisingly specialize in capital-intensive activities.

scholarly journals The Impact of the COVID-19 Pandemic on China's Manufacturing Sector: A Global Value Chain Perspective

2021 ◽  
Vol 9 ◽  
Author(s):  
Yuegang Song ◽  
Xiazhen Hao ◽  
Yilin Hu ◽  
Zhou Lu
Keyword(s):  
Value Chain ◽  
Negative Impact ◽  
Manufacturing Sector ◽  
Third Sector ◽  
Value Added ◽  
Chinese Government ◽  
Global Value Chain ◽  
Electromechanical Equipment ◽  
Trade Analysis ◽  
The Impact

This paper, based on the notion of Trade in Value Added (TiVA), combines the global trade analysis project (GTAP) model with the value-added model in seeking to simulate and assess the impact of the COVID-19 pandemic on China's manufacturing sector in global value chain (GVC) reconfiguration. The empirical study provides three major results. First, at the macroeconomic level, the pandemic wreaks a negative impact on all the economies, including the U.S., in regard to import & export trade, GDP and social welfare policy. Second, nation-level simulation shows that there's a remarkable disparity across different pandemic scenarios in the level of division of labor and of GVC participation for China and its trade partners. Third, sector-level analysis shows that the impacts of the pandemic include promoting the level of GVC participation and of labor division in China's manufacturing sector (electromechanical equipment and computer goods). This paper also provides policy advice for Chinese government: participation in higher-end GVCs, introduction of further structural reforms and retention of foreign investors, and active responses to GVC reconfiguration and cross-border capital flow.

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