Mumbai: Asia’s participation in global value chains has been critical for job creation in the continent. However, these jobs could now be under threat from technology. According to new research, technologies such as digital manufacturing and robots could result in job losses in the region.
In a study published by the Asian Development Bank, Donald Jay Bertulfo and others examine how jobs in developing Asia respond to consumption, trade, and technological advances in a dozen economies, including India, China and Indonesia, which accounted for 90% of Asia’s employment between 2005 and 2015. They first show how "task relocation" associated with integrated production networks benefited certain countries. Both Bangladesh and India witnessed faster growth in manufacturing employment between mid-2000 and mid-2010, which the authors attribute to greater integration with global value chains.
However, the authors also find that technological advances along these value chains are associated with a decrease in employment in both routine and non-routine occupations.
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Moreover, the negative effects of technological change exceed the favourable effects of task relocation, thus hurting overall employment. Textile workers in developing countries, who are an important example of how labour-intensive countries contribute to the global value chain, are now being replaced by robots in advanced countries.
Encouragingly though, the study finds that increased domestic consumption expenditure, driven by the emergence of a consuming middle-class, generated an 11% increase in jobs. This is large enough to offset the negative employment impact of technological change.
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The study also shows that in eight of the 12 developing Asian economies studied, there has been a change in the nature of jobs because of technology.
In countries such as India, Indonesia, and China, non-routine jobs, which require more skill, have grown faster in comparison to routine jobs.
Read: The employment effects of technological innovation, consumption and participation in global value chains: evidence from developing Asia