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The effects of innovation on employment in developing countries: evidence from enterprise surveys

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  • Xavier Cirera
  • Leonard Sabetti

Abstract

This article sheds light on the direct impact of technological as well as organizational innovation on firm-level employment growth using a global sample of over 15,000 firms in developing countries. The main findings suggest that new sales associated with product innovation are produced, on average, with just as much or higher levels of labor intensity than old products. However, the additionality to employment decreases with productivity, proxied by income per capita. In line with other studies, process innovation does not impact the additionality of employment, but there is some evidence of automation reducing the impact of product innovation on employment.

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  • Xavier Cirera & Leonard Sabetti, 2019. "The effects of innovation on employment in developing countries: evidence from enterprise surveys," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 28(1), pages 161-176.
    • Handle: RePEc:oup:indcch:v:28:y:2019:i:1:p:161-176.
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    1. Xavier Cirera & Leonard Sabetti, 2019. "The effects of innovation on employment in developing countries: evidence from enterprise surveys," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 28(1), pages 161-176.
    2. Jose Miguel Benavente & Rodolfo Lauterbach, 2008. "Technological innovation and employment: complements or substitutes?," The European Journal of Development Research, Taylor and Francis Journals, vol. 20(2), pages 318-329.
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    5. Gustavo Crespi & Ezequiel Tacsir & Mariano Pereira, 2019. "Effects of innovation on employment in Latin America," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 28(1), pages 139-159.
    6. Jacques Mairesse, 2008. "Employment, innovation, and productivity: evidence from Italian microdata," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 17(4), pages 813-839, August.
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    11. Victoria Castillo & Alessandro Maffioli & Sofía Rojo & Rodolfo Stucchi, 2014. "The effect of innovation policy on SMEs’ employment and wages in Argentina," Small Business Economics, Springer, vol. 42(2), pages 387-406, February.
    12. Vivarelli, Marco, 2012. "Innovation, Employment and Skills in Advanced and Developing Countries: A Survey of the Literature," IZA Discussion Papers 6291, Institute of Labor Economics (IZA).
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    15. Bruce Tether, 2003. "The sources and aims of innovation in services: Variety between and within sectors," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 12(6), pages 481-505.
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    Cited by:

    1. Avenyo, Elvis Korku & Konte, Maty & Mohnen, Pierre, 2019. "The employment impact of product innovations in sub-Saharan Africa: Firm-level evidence," Research Policy, Elsevier, vol. 48(9), pages 1-1.
    2. Blessing Atwine & Ibrahim Mike Okumu & John Bosco Nnyanzi, 2023. "What drives the dynamics of employment growth in firms? Evidence from East Africa," Journal of Innovation and Entrepreneurship, Springer, vol. 12(1), pages 1-25, December.
    3. Ayoki, Milton & Tumwebaze, Henry & Bbaale, Edward, 2018. "Innovation and employment in Sub-Saharan Africa: Evidence from Uganda Microdata," MPRA Paper 109278, University Library of Munich, Germany.
    4. Avom, Désiré & Dadegnon, Aimé Kocou & Igue, Charlemagne Babatoundé, 2021. "Does digitalization promote net job creation? Empirical evidence from WAEMU countries," Telecommunications Policy, Elsevier, vol. 45(8).
    5. Romanus Osabohien & Haoma Worgwu & Syed Kashif Rafi & Oluwasogo Adediran & Oluwatoyin Matthew & Busayo Aderounmu, 2022. "Impact of business innovation on future employment in Nigeria," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(8), pages 3795-3806, December.
    6. Juthathip Jongwanich & Archanun Kohpaiboon & Ayako Obashi, 2020. "Technological Advancement, Import Penetration, and Labour Markets: Evidence from Thai Manufacturing," Working Papers DP-2020-09, Economic Research Institute for ASEAN and East Asia (ERIA).
    7. Paola Azar, 2020. "Politics as a determinant of primary school provision The case of Uruguay, 1914-1954," Documentos de Trabajo (working papers) 20-07, Instituto de Economía - IECON.
    8. Ofori, Pamela E. & Ofori, Isaac K. & Castelnovo, Paolo, 2024. "Effects of Innovation and Economic Freedom on Female Economic Inclusion," EconStor Preprints 298786, ZBW - Leibniz Information Centre for Economics.
    9. Xavier Cirera & Leonard Sabetti, 2019. "The effects of innovation on employment in developing countries: evidence from enterprise surveys," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 28(1), pages 161-176.
    10. Gaygysyz Ashyrov & Helery Tasane, 2024. "The roles of foreign and domestic ownership in the corruption–firm innovation nexus," Bulletin of Economic Research, Wiley Blackwell, vol. 76(1), pages 167-202, January.
    11. Ibrahim Mike Okumu & Edward Bbaale & Madina Mwagale Guloba, 2019. "Innovation and employment growth: evidence from manufacturing firms in Africa," Journal of Innovation and Entrepreneurship, Springer, vol. 8(1), pages 1-27, December.
    12. Delera, Michele & Pietrobelli, Carlo & Calza, Elisa & Lavopa, Alejandro, 2022. "Does value chain participation facilitate the adoption of Industry 4.0 technologies in developing countries?," World Development, Elsevier, vol. 152(C).
    13. Ofori, Pamela E. & Ofori, Isaac K. & Castelnovo, Paolo, 2024. "Effects of Innovation and Economic Freedom on Female Economic Inclusion," MPRA Paper 121244, University Library of Munich, Germany.
    14. Keraga, Mezid N. & Lööf, Hans & Stephan, Andreas, 2024. "Innovation and employment in sub-Saharan Africa: New evidence from the World Bank Enterprise Survey," Working Paper Series in Economics and Institutions of Innovation 497, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    15. Rajeev K. Goel & Michael A. Nelson, 2022. "Employment effects of R&D and process innovation: evidence from small and medium-sized firms in emerging markets," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 12(1), pages 97-123, March.
    16. De Nicola,Francesca & Chen,Pinyi, 2022. "The Returns to Innovation in East Asia : The Role of the Business Environment and Firms' Characteristics," Policy Research Working Paper Series 9921, The World Bank.
    17. Porath, Daniel & Nabachwa, Sarah & Agasha, Ester & Kijjambu, Nsambu Frederick, 2021. "Innovation and employment in Sub-Saharan Africa," UASM Discussion Paper Series 10/2021, University of Applied Sciences Mainz.
    18. Carlos Bianchi & Hugo Laguna, 2020. "Firm’s innovation strategies and employment: new evidence from Uruguay," Documentos de Trabajo (working papers) 20-06, Instituto de Economía - IECON.
    19. Akhilesh Kumar Sharma & Sushil Kumar Rai, 2024. "COVID-19 and Sectoral Employment in India: Impact and Implications," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 67(1), pages 177-196, March.
    20. Santos, Anabela Marques & Barbero, Javier & Salotti, Simone & Conte, Andrea, 2023. "Job creation and destruction in the digital age: Assessing heterogeneous effects across European Union countries," Economic Modelling, Elsevier, vol. 126(C).
    21. Juthathip Jongwanich & Archanun Kohpaiboon & Ayako Obashi, 2020. "Technological Advancement, Import Penetration, and Labour Markets: Evidence from Thai Manufacturing," Working Papers ERIA-DP-2020-09, Economic Research Institute for ASEAN and East Asia (ERIA).
    22. Keraga, Mezid N. & Stephan, Andreas, 2023. "Does innovation stimulate employment in Africa? New firm-level evidence from the Worldbank Enterprise Survey," Working Paper Series in Economics and Institutions of Innovation 494, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.

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    More about this item

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis

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