Trade linkages and skill demand : empirical evidence for the Malaysian electrical and electronics industries
This article empirically investigates whether trade linkages have any contribution to skill upgrading in the Malaysian electrical and electronics (E&E) firms by using establishment level data. The richness of data provided by Department of Statistics Malaysia (DOSM) enable us to explore the di...
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| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
Penerbit Universiti Kebangsaan Malaysia
2018
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| Online Access: | http://journalarticle.ukm.my/19627/1/jeko_521-8.pdf http://journalarticle.ukm.my/19627/ https://www.ukm.my/jem/issue/v52i1/ |
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| Summary: | This article empirically investigates whether trade linkages have any contribution to skill upgrading in the Malaysian
electrical and electronics (E&E) firms by using establishment level data. The richness of data provided by Department
of Statistics Malaysia (DOSM) enable us to explore the direct impact of each aspect of trade linkages, including exports
of goods, imported inputs (outsourcing), and foreign ownership (FDI). More crucially, this research analyse the effects
of the modern trade pattern, i.e. vertical trade which would best capture the current trend in the Malaysian E&E sector
– high overlap in exports and imported inputs. The skill demand is analysed using dynamic skill share demand equation
and GMM (generalised method of moments) estimator addresses both the endogeneity and firm fixed effect. Contrary
to previous studies, results suggest that export and outsourcing do not significantly contribute to skill upgrading in
Malaysian E&E establishments within the period under study. Plus, vertical trade and foreign share have significant
negative impact on relative demand for skilled workers. These findings provide evidence that vertical trade as well as
the presence of multinational corporations (MNCs) are associated with skill downgrading in Malaysian E&E sector.
Empirical evidence does not uphold the conventional wisdom of the beneficial effects of trade especially ultra-vertical
or export processing trade on skill upgrading. |
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