Competition and Innovation-Driven Inclusive Growth
The paper investigates the strength of innovation-driven employment growth, the role of competition in stimulating and facilitating it, and whether it is inclusive. In a sample of more than 26,000 manufacturing establishments across 71 countries (b...
| Main Authors: | , , , |
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| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
2012
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| Subjects: | |
| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20111021133253 http://hdl.handle.net/10986/3618 |
| Summary: | The paper investigates the strength of
innovation-driven employment growth, the role of competition
in stimulating and facilitating it, and whether it is
inclusive. In a sample of more than 26,000 manufacturing
establishments across 71 countries (both OECD and
developing), the authors find that firms that innovate in
products or processes, or that have attained higher total
factor productivity, exhibit higher employment growth than
non-innovative firms. The strength of firms'
innovation-driven employment growth is significantly
positively associated with the share of the firms'
workforce that is unskilled, debunking the conventional
wisdom that innovation-driven growth is not inclusive in
that it is focused on jobs characterized by higher levels of
qualification. They also find that young firms have higher
propensities for product or process innovation in countries
with better Doing Business ranks (both overall and ranks for
constituent components focused on credit availability and
property registration). Firms generally innovate more and
show greater employment growth if they are exposed to more
information (through internet use and membership in business
organizations) and are exporters. The empirical results
support the policy propositions that innovation is a
powerful driver of employment growth, that innovation-driven
growth is inclusive in its creation of unskilled jobs, and
that the underlying innovations are fostered by a
pro-competitive business environment providing ready access
to information, financing, export opportunities, and other
essential business services that facilitate the entry and
expansion of young firms. |
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