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Jurnal Ekonomi Malaysia

52 (1) 2018 89 – 103

Trade Linkages and Skill Demand: Empirical Evidence for the Malaysian Electrical and Electronics Industries
Hubungan Antarabangsa dan Permintaan Buruh Berkemahiran: Bukti Empirik bagi Industri Elektrik dan Elektronik Malaysia

Fakulti Ekonomi dan Pengurusan
Universiti Kebangsaan Malaysia
43600 UKM Bangi
Selangor

azma@ukm.edu.my

Fakulti Ekonomi dan Pengurusan
Universiti Kebangsaan Malaysia
43600 UKM Bangi
Selangor

na.khalifah@gmail.com

Abstract

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.

Keywords

empirical studies of trade and labour demand; Vertical trade

Author’s Acknowledgement

Research support from the Universiti Kebangsaan Malaysia, via GGP-2014-002 is gratefully acknowledged. We also thank the Department of Statistics Malaysia for providing the data. The usual disclaimer applies. This is an extended and revised version of a preliminary working paper uploaded in Forum for Research in Empirical International website (Jauhari, A. & Khalifah, N.A. Trade linkages and skills demand: Empirical evidence for the Malaysian E&E. Freit Working Paper No. 704, Forum for Research in Empirical International, San Rafael, CA)

http://dx.doi.org/10.17576/JEM-2018-5201-8
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Jauhari, , & khalifah, (2018). Trade Linkages and Skill Demand: Empirical Evidence for the Malaysian Electrical and Electronics Industries. Jurnal Ekonomi Malaysia, 52(1), 89–103. http://dx.doi.org/10.17576/JEM-2018-5201-8

@article{jauhari2018trade,
  title={Trade Linkages and Skill Demand: Empirical Evidence for the Malaysian Electrical and Electronics Industries},
  author={Jauhari, Azmafazilah Binti and khalifah, noor},
  journal={Jurnal Ekonomi Malaysia},
  volume={52},
  number={1},
  pages={89—103},
 

year={2018},
}

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