Incomes and Jobs in Global Production of Manufactures: New Measures of Competitiveness Based on the World Input-Output Database

The chapter presents new evidence on the main changes in GVC income and jobs across both mature and developing countries. Taken together, the results show that international fragmentation in the production of manufactures has been accompanied by a rapid shift toward higher-skilled activities in advanced nations. These activities are increasingly carried out in the services sector and no longer in the manufacturing sector itself. As such, the shift contributes to the so-called job polarization in advanced economies, as the displaced manufacturing workers are likely to be absorbed into personal and distributional services, where low-skilled employment opportunities are still growing. Emerging economies are taking up increasing shares in global GVC income; much of this increase has been driven by rapid growth in China after its accession to the WTO in 2001. We also find increasing intertwining of manufacturing and services activities, which argues against a myopic view of manufacturing
jobs in discussions on GVC issues. Rather than focusing on the particular sector in which jobs are lost or created, the discussion should be led by a view toward the activities that are carried out in GVCs, irrespective of the sector in which they are ultimately classified. Thinking in terms of sectors is basically a relic of a world where fragmentation of production, both domestically and internationally, had not progressed far.