Impact of Global Value Chains’ Participation on Employment in Turkey and Spillovers Effects

Abstract

This study examines the impacts of the integration of Global Value Chains (GVCs) through backward and forward linkages on the employment in Turkey. This study is based on the world input-output data (WIOD) table of 2016. The study analyzes the trends of GVCs participation indicators from 2000 to 2014. It is observed that manufacturing sectors post faster growth through backward linkages, whereas service sectors through forward linkages. Using fixed effects estimation and controlling for the spillovers effects of GVCs indicators using a spatial weigh matrix approach, the study reveals that jobs creation depends not only on GVCs integration within the own sectors but also on the changes in GVCs participation in neighboring sectors, indicating significant spillovers effects across sectors. Moreover, employment in manufacturing benefits most from GVCs integration via backward linkages; however, employment declines with higher backward linkages in neighboring sectors. GVCs integration via forward linkages appears to displace labor in the service sectors.