Labour Force Effects to Current Account Movement of ASEAN + 6 Countries

Abstract

Heckscher-Ohlin-Mundell framework suggests that if a country has unexpectedly increased the permanent labour force, there will be a change in the production structure. Increases in the relative proportion of labour-intensive product demand occur and, hence, decrease the need for investment relative to domestic saving, and encourage the current account surplus. This paper tries to fill the empirical studies gap on the effects of the labour force, especially its utilization in the data panel of ASEAN + 6 countries using the generalized method of moments (GMM) used to capture the unobserved heterogeneity and endogeneity across countries that often arise in a panel data model. The estimation result shows that the labour force has an asymmetric shock and it only affects the country of origin, even when the financial institution deepening as a control variable is included. The analysis also indicates that labour regulations in these countries tend to be rigid because the speed with which the current account adjusts is relatively slow.

Speed of convergence in global value chains: Forward or backward linkage

“…Convergence in GVCs has not been widely studied, in contrast to convergence of income, output, and productivity [ 12 , 32 , 36 , 37 ]. Filip [ 12 ] analyzed the relationship between income convergence and GVCs in European Union (EU) countries, and shows that the Central Eastern European-3 (CEEC-3) (Romania, Bulgaria, and Croatia) have grown faster than the EU-25.…”