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Automation, firm performance, and employment: Evidence from developing countries

Author

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  • Radeef Chundakkadan

    (Indian Institute of Technology Bombay, Department of Economics)

  • Subash Sasidharan

    (Indian Institute of Technology Madras, Department of Humanities and Social Sciences)

  • Kausik Chaudhuri

    (Leeds University Business School, Economics Division)

Abstract

This study documents the relationship between automation and firm productivity, innovation, and employment using firm-level data from 36 developing countries. To identify firms that use automation technologies, we employ a text-based approach to the World Bank Enterprise Survey. We find a positive correlation between the adoption of automation and firm productivity. Furthermore, we observe that firms with automation are more likely to introduce new products or services. These firms are less likely to imitate existing products/services in the market; rather, they introduce a product/ service that is new to the market. Finally, automation adoption is not at the cost of employment. Our findings suggest that automation is positively associated with the number of skilled workers and negatively associated with the number of unskilled workers.

Suggested Citation

  • Radeef Chundakkadan & Subash Sasidharan & Kausik Chaudhuri, 2025. "Automation, firm performance, and employment: Evidence from developing countries," Journal of Evolutionary Economics, Springer, vol. 35(5), pages 873-900, November.
    • Handle: RePEc:spr:joevec:v:35:y:2025:i:5:d:10.1007_s00191-025-00913-w
    DOI: 10.1007/s00191-025-00913-w
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    JEL classification:

    • O00 - Economic Development, Innovation, Technological Change, and Growth - - General - - - General
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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