Labour Markets and Global Value Chain Integration: Moderating the labour market implications of trade integration in Sub-Saharan Africa

Abstract: With the rise of international fractionalization of production, global value chain (GVC) integration has become an important pillar of economic growth strategies, especially in low- and middle-income countries during the past decades. Differentiating between backward and forward GVC integration, economic growth and upgrading potentials are well-defined, but to be sustainable growth through GVC integration needs to incorporate decent job creation. By investigating the labour market implications of GVC integration and potential country-specific characteristics moderating these relationships, this paper aims to shed light on the ability of GVC integration to foster inclusive economic growth. Using fixed-effects panel regressions on a set of 17 Sub-Saharan African countries during the period 2000-2015, labour intensity embodied in GVC trade has been found to decrease. This is especially prevalent for backward integrated trade, where in some cases, higher levels of trade are associated with lower levels of total employment and labour compensation. When promoting GVC integration as a growth paradigm, this joblessness of export growth should alert policy makers and be taken as a reminder that the inclusiveness of growth is not an automatism. For the moderation of the GVC-labour nexus education and infrastructure have been found impactful. While transport infrastructure has been found to matter for all sectors, the moderating effect of ICT infrastructure on trade in services is surprisingly absent.