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Manufacturing employment, international trade, and China

The decline in manufacturing employment is often seen as a major reason for rising inequality, social tensions, and the slump of entire communities. With the rise of national populists and protectionists in recent years, the issue has become even more prominent.

By: and Date: November 28, 2019 Topic: Global Economics & Governance

The objective of this paper is to better understand the evolution of manufacturing employment across the world. Manufacturing value added has grown rapidly since 2000, at least matching world GDP growth, even after the global financial crisis, reflecting mainly rising demand for manufactures especially in developing countries. However, manufacturing employment increased at only a slow pace, both before and after the global financial crisis. Manufacturing employment growth provided only about 10% of the new jobs needed to compensate for losses in agriculture and the growth of the active population. Most of the net job creation in manufacturing was in China, while most countries – both developing and developed – saw manufacturing employment decline as a share of total employment and several, including all or nearly all advanced countries, saw an absolute decline. The remarkable economic transformation in China has brought shifts in employment within the country, which were far larger, in fact of a different order of magnitude, than in other countries, entailing the redeployment towards manufacturing of tens of millions of workers, mainly drawn from agriculture. But, because China tends to consume much of the manufactures it produces, especially since the financial crisis, its increased integration into world trade is not at the root of the manufacturing employment stagnation in the rest of the world. In the sample of the countries we examined, including the United States, the increase in labour productivity in manufactures, due to automation and improved methods, was a far more important cause of employment decline than shifts in the manufacturing trade balance, contrary to a commonly held view. We find only weak evidence that the size of the manufacturing sector – measured in different ways — is associated with rapid economic growth. Several countries have grown at a reasonable pace without seeing a large increase in the relative size of their manufacturing sector. While the growth of labour productivity in the manufacturing sector is higher than that of the economy as a whole on average, several economies saw economy-wide labour productivity grow faster than labour productivity in manufacturing, including several countries in East Asia.

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Blog Post

How COVID-19 is laying bare inequality

COVID-19 is laying bare socio-economic inequalities and could exacerbate them in the near future. The virus is a risk factor particularly for those at the lower end of the income distribution, who are vulnerable to the interaction of the shock with income, socio-economic and urban inequalities.

By: Enrico Bergamini Topic: Global Economics & Governance Date: March 31, 2020
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Blog Post

What the EU should do and not do on trade in medical equipment

The European Union has introduced export controls on some medical supplies. This was a mistake. It should announce that it is withdrawing the measure, and call on other countries to do the same.

By: André Sapir Topic: European Macroeconomics & Governance Date: March 25, 2020
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Past Event

Past Event

CANCELLED: India-EU Partnership: New Vistas for the Next Decade

Policymakers, academics and private sector actors from the EU and India come together to work on common issues and explore further areas of cooperation.

Speakers: Yamini Aiyar, Suman Bery, Navroz K Dubash, Alicia García-Herrero, Rajat Kathuria, Partha Mukhopadhyay, Ananth Padmanabhan, Georgios Petropoulos, André Sapir, Shyam Saran, Simone Tagliapietra and Marc Vanheukelen Topic: Global Economics & Governance Location: India International Centre, Lodhi Gardens, Lodhi Estate, New Delhi, Delhi, India Date: March 12, 2020
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Opinion

Uncoordinated policies behind market collapse

Underlying issues, and not just the coronavirus panic, fed the recent meltdown

By: Alicia García-Herrero Topic: Global Economics & Governance Date: March 10, 2020
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Blog Post

Gerard Masllorens headshot

The cost of coronavirus in terms of interrupted global value chains

The coronavirus is slowly morphing itself into an important shock. While the extent and cost of this pandemic are unknown, we do know that global supply chains that link Europe to China will be seriously disturbed. We take a look at the numbers based on input-output models. The industry that will be the most affected is Computers and Electronics, followed by textiles.

By: Maria Demertzis and Gerard Masllorens Topic: Global Economics & Governance Date: March 9, 2020
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Blog Post

What can the EU learn from the China-Switzerland free trade agreement?

The US-China trade war has placed EU trade relations with China under the microscope. Should the EU challenge China’s trade practices and employ trade defence measures? Or should they be diplomatic and embark on negotiations, perhaps paving the way to a Free Trade Agreement? Close examination of the 2013 agreement between China and Switzerland suggests much will have to change for trade negotiations between China and the EU to succeed.

By: Uri Dadush and Marta Domínguez-Jiménez Topic: Global Economics & Governance Date: March 3, 2020
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Opinion

Companies must move supply chains further from China

Virus shows Southeast Asian factories too dependent on imported production inputs

By: Alicia García-Herrero Topic: Global Economics & Governance Date: February 28, 2020
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Opinion

Why the US Trade Agreement will slow China’s economy

The response of the global financial markets to the trade agreement reached between the United States and China has been very positive, probably excessively so given the relatively limited size of the agreement reached.

By: Alicia García-Herrero Topic: Global Economics & Governance Date: February 20, 2020
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Opinion

Epidemic tests China’s supply chain dominance

Much has been written on the Wuhan coronavirus that causes the respiratory disease Covid-19, but very little is known yet about its impact on the global economy and, in particular, the global value chain. Still, one thing is clear: The shock is bigger than that caused by severe acute respiratory syndrome (SARS), for the simple reason that China is much more important for the global economy than it was then.

By: Alicia García-Herrero Topic: Global Economics & Governance Date: February 17, 2020
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Opinion

China’s Coronavirus will not lead to recession but to stimulus and even more debt

The coronavirus outbreak will not lead to recession but the costs of ensuring growth targets will be high

By: Alicia García-Herrero Topic: Global Economics & Governance Date: February 6, 2020
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Past Event

Past Event

The quality and quantity of work in the age of AI

At this event, the panelists will discuss the implications of Artificial Intelligence on the labour market and the future of work in general.

Speakers: Robert Atkinson, Anna Byhovskaya, Maria Demertzis, Carl Frey and Daniel Samaan Topic: Innovation & Competition Policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: February 5, 2020
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Working Paper

Zsolt Darvas - Resisting deglobalisation: the case of Europe

Resisting deglobalisation: the case of Europe

Global trade and finance data indicates that the pre-2008 pace of economic globalisation has stalled or even reversed. The European Union has defied this trend, with trade flows and financial claims continuing to grow after the recovery from the 2008 global economic and financial crisis. Immigration, including intra-EU mobility, has also continued to increase.

By: Zsolt Darvas Topic: European Macroeconomics & Governance Date: February 4, 2020
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