Skip to main content
SpringerLink
Log in

Employment Impact of Technologies in the Developing World

  • Living reference work entry
  • First Online:
Handbook of Labor, Human Resources and Population Economics

Abstract

This chapter proposes to examine the impact of technological progress on employment in developing countries. Using the World Enterprise Survey data, the focus is laid on the manufacturing sector. On employment, the impact of foreign technology, imported inputs, and foreign ownership are positive. Domestic innovation also results in higher levels of employment. Hence, foreign technology and better quality imported inputs can be beneficial for the firms as new opportunities may come up for expansion in activities though the joint effect turns out to be negative. Furthermore, the skilled labor demand responds positively to technology and input acquisition from abroad while the unskilled labor demand does not rise significantly. Domestic innovation also shows positive effect on skilled labor. Hence, it seems that the dampening effect of new technology on employment in absolute sense seems to be rather exaggerated while the concern may be justified in relative terms or in reference to unskilled labor particularly.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution

Institutional subscriptions

References

  • Acemoglu D (1998) Why do new technologies complement skills? Directed technical change and wage inequality. Q J Econ 113:1055–1090

    Article  Google Scholar 

  • Acemoglu D (2003) Patterns of skill premia. Rev Econ Stud 70(2):199–230

    Article  Google Scholar 

  • Aghion P, Howitt P (1994) Growth and unemployment. Rev Econ Stud 61(3):477–494

    Article  Google Scholar 

  • Amiti M, Konings J (2007) Trade liberalization, intermediate inputs and productivity: evidence from Indonesia. Am Econ Rev 97(5):1611–1638

    Article  Google Scholar 

  • Basant R, Fikkert B (1996) The effects of R&D, foreign technology purchase, and domestic and international spillovers on productivity in Indian firms. Rev Econ Stat 78(2):187–199

    Article  Google Scholar 

  • Baumol W J, Wolff EN (1998) Side effects of progress. Public Policy Brief (41A) The Jerome Levy Economics Institute, NY, United States

    Google Scholar 

  • Berman E, Machin S (2004) Globalization, skill-biased technological change and labour demand. In: Lee E, Vivarelli M (eds) Understanding globalization, employment and poverty reduction. Palgrave Macmillan, New York, pp 39–66

    Google Scholar 

  • Berman E, Bound J, Griliches Z (1994) Changes in the demand for skilled labor within US manufacturing: evidence from the annual survey of manufactures. Q J Econ 109(2):367–397

    Article  Google Scholar 

  • Berman E, Somanathan R, Tan HW (2005) Is skill biased technology adoption here Yet? Evidence from India manufacturing in the 1990s. World Bank Policy Research Working Paper 3761, November

    Google Scholar 

  • Braga H, Willmore L (1991) Technological imports and technological effort: an analysis of their determinants in Brazilian firms. J Ind Econ 39(4):421–432

    Article  Google Scholar 

  • Cirillo V (2014) Patterns of innovation and wage distribution. Do innovative firms pay higher wages? Evidence from Chile. Eur Bus Rev 4:181–206

    Article  Google Scholar 

  • Coe DT, Helpman E (1995) International R&D Spillovers. Eur Econ Rev 39(5):859–887

    Article  Google Scholar 

  • Comin D (2004) R&D: a small contribution to productivity growth. J Econ Growth 9(4):391–421

    Article  Google Scholar 

  • Commission for Africa (2005) Our Common Interest. http://www.commissionforafrica.info/wp-content/uploads/2005-report/11-03-05_cr_report.pdf

  • Cuneo P, Mairesse J (1984) Productivity and R&D at the firm level in French manufacturing. In: Griliches Z (ed) R&D, patents and productivity. University of Chicago Press, Chicago

    Google Scholar 

  • Das KD, Kalita G (2009) Do labour intensive industries generate employment? Evidence from firm level survey in India, Working Paper No. 237 (New Delhi, Indian Council for Research on International Economic Relations)

    Google Scholar 

  • Eaton J, Kortum S (1996) Trade in ideas: patenting and productivity in the OECD. J Int Econ 40:251–278

    Article  Google Scholar 

  • Edquist C, Hommen L, McKelvey M (2001) Innovation and employment: process versus product innovation. Edward-Elgar, Cheltenham

    Book  Google Scholar 

  • Edwards L, Sanfilippo M, Sundaram A (2018) Importing and firm export performance: new evidence from South Africa. S Afr J Econ 86:79–95

    Article  Google Scholar 

  • Ferrantino MJ (1992) Transaction costs and the expansion of third-world multinationals. Econ Lett 38(4):451–456

    Article  Google Scholar 

  • Frankel JA, Romer D (1999) Does trade cause growth? Am Econ Rev 89(3):379–399

    Article  Google Scholar 

  • Goldberg P, Khandelwal A, Pavcnik N, Topalova P (2010) Imported intermediate inputs and domestic product growth: evidence from India. Q J Econ 125(4):1727–1767

    Article  Google Scholar 

  • Griffith R, Redding S, Reenen JV (2004) Mapping the two faces of R&D: productivity growth in a panel of OECD industries. Rev Econ Stat 86(4):883–895

    Article  Google Scholar 

  • Griliches Z (1979) Issues in assessing the contribution of R&D to productivity. Bell J Econ 10:92–116

    Article  Google Scholar 

  • Griliches Z (1986) Productivity, R&D, and basic research at the firm level in the 1970s. Am Econ Rev 76(1):141–154

    Google Scholar 

  • Griliches Z, Mairesse J (1990) R&D and productivity growth: comparing Japanese and American manufacturing firms. In: Hulten C (ed) Productivity growth in Japan and the United States, NBER studies in income and wealth, vol 53. University of Chicago Press, Chicago, pp 317–348

    Google Scholar 

  • Grossman GM, Helpman E (1990) Trade, innovation and growth. Am Econ Rev 80(2):86–91. Papers and proceedings of the hundred and second annual meeting of the American Economic Association

    Google Scholar 

  • Grossman GM, Helpman E (1991) Trade, knowledge spillovers, and growth. European economic review 35(2–3):517–526

    Article  Google Scholar 

  • Gupta M, Kumar M (2018) Impact of ICT usage on productivity of unorganised manufacturing enterprises in India. Indian J Labour Econ 61:411–425

    Article  Google Scholar 

  • Halpern L, Koren M, Szeidl A (2009) Imported inputs and productivity. CeFiG Working Papers 8. Center for Firms in the Global Economy, Budapest

    Google Scholar 

  • Harrison RJ, Jaumandreu J, Mairesse J, Peters B (2014) Does innovation stimulate employment? A firm level analysis using comparable micro-data from four European countries. Int J Ind Organ 35:29–43

    Article  Google Scholar 

  • Hirschman AO (1969) The strategy of economic development. In: Agarwal AN, Singh SP (eds) Accelerating investment in developing economies. Oxford University Press, Oxford

    Google Scholar 

  • Jaffe AB (1986) Technological opportunity and spillovers of R&D: evidence from firms’ patents, profits, and market value. Am Econ Rev 76(5):984–1001

    Google Scholar 

  • James J (1993) New technologies, employment and labour markets in developing countries. Dev Chang 24:405–437

    Article  Google Scholar 

  • Jones CI (2008) Intermediate goods and weak links: a theory of economic development. NBER Working Paper 13834. National Bureau of Economic Research, Cambridge, MA

    Google Scholar 

  • Kasahara H, Rodrigue J (2008) Does the use of imported intermediates increase productivity? Plant-level evidence. J Dev Econ 87(1):106–118

    Article  Google Scholar 

  • Kato A, Mitra A (2008) Imported technology and employment: evidence from panel data on Indian manufacturing firms. In: Hashim SR, Siddharthan NS (eds) High-tech industries, employment and global competitiveness. Routledge, New Delhi, 180–194

    Google Scholar 

  • Katsoulacos YS (1986) The employment effect of technical change: a theoretical study of new technology and the labour market. University of Nebraska, Wheatsheaf

    Google Scholar 

  • Keller W (2004) International technology diffusion. J Econ Lit 42(3):752–782

    Article  Google Scholar 

  • Keller W, Yeaple SR (2009) Multinational enterprises, international trade, and productivity growth: a firm level evidence from the United States. Rev Econ Stat 91(4):821–831

    Article  Google Scholar 

  • Khanna R, Sharma C (2018) Testing the effect of investments in IT and R&D on labour productivity: new method and evidence for Indian firms. Econ Lett 173:30–34

    Article  Google Scholar 

  • Kraay A, Soloaga I, Tybout J (2001) Product quality; productive efficiency and international technology diffusion: evidence from plant-level panel data. Policy Research Working Papers 2759. World Bank

    Google Scholar 

  • Kujur SK (2018) Impact of technological change on employment: evidence from the organised manufacturing industry in India. Indian J Labour Econ 61:339–376

    Article  Google Scholar 

  • Lawrence RZ, Weinstein DE (1999) Trade and growth: import-led or export led? Evidence from Japan and Korea. NBER Working Papers 7264. National Bureau of Economic Research, Cambridge, MA

    Google Scholar 

  • Lee YN, Walsh JP (2016) Inventing while you work: knowledge, non-R&D learning and innovation. Res Policy 45(1):345–359

    Article  Google Scholar 

  • Machin S, van Reenen J (1998) Technology and changes in skill structure: evidence from seven OECD countries. Q J Econ 113(4):1215–1244

    Article  Google Scholar 

  • Majumder R (2018) Technology and labour market: insights from Indian manufacturing sector. Indian J Labour Econ 61:321–338

    Article  Google Scholar 

  • Mitra A, Sharma C, Véganzonès-Varoudakis MA (2014) Trade liberalization, technology transfer, and firms’ productive performance: the case of Indian manufacturing. J Asian Econ 33:1–15

    Article  Google Scholar 

  • Muendler MA (2004) Trade, technology, and productivity: a study of Brazilian manufacturers, 1986–1998. CESifo Working Paper Series No. 1148. CESifo Group, Munich

    Google Scholar 

  • Nathan D, Ahmed N (2018) Technological change and employment: creative destruction. Indian J Labour Econ 61:281–298

    Article  Google Scholar 

  • Pianta M (2004) Innovation and employment. In: Fagerberg J, Mowery DC, Nelson RR (eds) The Oxford handbook of technology adoption. Oxford University Press, Oxford

    Google Scholar 

  • Pianta M (2018) Technology and employment: twelve stylised facts for the digital age. Indian J Labour Econ 61:189–225

    Article  Google Scholar 

  • Pissarides C, Vallanti G (2004) Productivity growth and employment: theory and panel estimates Discussion Paper. LSE Centre for Economic Performance

    Google Scholar 

  • Piva M (2003) The impact of technology transfer on employment and income distribution in developing countries: a survey of theoretical models and empirical studies, International Labour Office, Policy Integration Department, International Policy Group, Working Paper No. 15. ILO, Geneva

    Google Scholar 

  • Raut LK (1995) R&D Spillover and productivity growth: evidence from Indian private firms. J Dev Econ 48(1):1–23

    Article  Google Scholar 

  • Rodrigue J, Kasahara H (2008) Does the use of imported intermediates increase productivity? Plant-level evidence. J Dev Econ 87(1):106–118

    Article  Google Scholar 

  • Romer P (1987) Growth based on increasing returns due to specialization. Am Econ Rev 77(2):56–62

    Google Scholar 

  • Sharma C (2012) R&D and firm performance: evidence from the Indian pharmaceutical industry. J Asia Pac Econ 17(2):332–342

    Article  Google Scholar 

  • Sharma C (2014) Imported intermediate inputs, R&D, and productivity at firm level: evidence from Indian manufacturing industries. Int Trade J 28(3):246–263

    Article  Google Scholar 

  • Sharma C (2016) R&D, technology transfer and productivity in the Indian pharmaceutical industry. Int J Innov Manag 20(1):1–24

    Article  Google Scholar 

  • Sharma C (2019) Effects of R&D and foreign technology transfer on productivity and innovation: an enterprises-level evidence from Bangladesh. Asian J Technol Innov 27(1):46–70

    Article  Google Scholar 

  • Shin N, Kraemer KL, Dedrick J (2017) R&D and firm performance in the semiconductor industry. Ind Innov 24(3):280–297

    Article  Google Scholar 

  • Solow RM (1957) Technical change and the aggregate production function. Rev Econ Stat 39:312–320

    Article  Google Scholar 

  • Ugur M, Mitra A (2017) Technology adoption and employment in less developed countries: a mixed-method systematic review. World Dev 96:1–18

    Article  Google Scholar 

  • UNIDO (2005) Productivity in developing countries: trends and policies. United Nations Industrial Development Organisation, Vienna

    Google Scholar 

  • Van Biesebroeck J (2003) Revisiting some productivity debates. NBER Working Paper 10065. National Bureau of Economic Research, Cambridge, MA

    Google Scholar 

  • Vashisht P (2018) Destruction or polarization: estimating the impact of technology on jobs in Indian manufacturing. Indian J Labour Econ 61:227–250

    Article  Google Scholar 

  • Vivarelli M (2011) Innovation, employment and skills in advanced and developing countries: a survey of the literature, IDB Publications 61058. Inter-American Development Bank

    Google Scholar 

  • Vivarelli M (2012) Innovation, employment and skills in advanced and developing countries: a survey of the literature, Discussion Paper series. Forschungsinstitut zur Zukunft der Arbeit, No. 6291

    Google Scholar 

  • Vivarelli M (2013) Technology, employment and skills: an interpretative framework. Eur Bus Rev 3:66–89

    Google Scholar 

  • Vivarelli M (2014) Innovation, employment and skills in advanced and developing countries: a survey of economic literature. J Econ Issues 48(1):123–154

    Article  Google Scholar 

  • Wang J, Tsai K (2003) Productivity growth and R&D expenditure in Taiwan’s manufacturing firms. NBER working papers no. 9724. National Bureau of Economic Research, Cambridge, MA

    Google Scholar 

  • Xu J, Mao Q (2018) On the relationship between intermediate input imports and export quality in China. Econ Transit 26(3):429–467

    Article  Google Scholar 

  • Xu B, Wang J (1999) Capital goods trade and R&D spillovers in the OECD. Can J Econ 32:1258–1274

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. South Asian University, Delhi, India

    Arup Mitra

  2. Indian Institute of Management Lucknow, Noida, India

    Chandan Sharma

Authors
  1. Arup Mitra
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Chandan Sharma
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Arup Mitra .

Editor information

Editors and Affiliations

  1. UNU-MERIT & Princeton University, Maastricht, The Netherlands

    Klaus F. Zimmermann

Section Editor information

  1. Department of Economic Policy, Università Cattolica del Sacro Cuore, Milano, Italy

    Marco Vivarelli

Rights and permissions

Reprints and permissions

Copyright information

© 2020 Springer Nature Switzerland AG

About this entry

Check for updates. Verify currency and authenticity via CrossMark

Cite this entry

Mitra, A., Sharma, C. (2020). Employment Impact of Technologies in the Developing World. In: Zimmermann, K. (eds) Handbook of Labor, Human Resources and Population Economics. Springer, Cham. https://doi.org/10.1007/978-3-319-57365-6_14-1

Download citation

  • DOI: https://doi.org/10.1007/978-3-319-57365-6_14-1

  • Received:

  • Accepted:

  • Published:

  • Publisher Name: Springer, Cham

  • Print ISBN: 978-3-319-57365-6

  • Online ISBN: 978-3-319-57365-6

  • eBook Packages: Springer Reference Economics and FinanceReference Module Humanities and Social SciencesReference Module Business, Economics and Social Sciences

Publish with us

Policies and ethics

Search

Navigation