Effects of Innovation on Employment in Low-Income Countries: A Mixed-Method Systematic Review

Abstract

We conduct a meta-analysis of the effect-size estimates from 9 empirical studies and a narrative synthesis of the qualitative evidence from 53 qualitative studies on the relationship between innovation and employment in low-income countries (LICs). The meta-analysis reveals a positive but small effect, with evident bias in favour of skilled-labour employment. Both meta-analysis and narrative synthesis findings indicate that innovation’s effects on employment in LICs tend to be larger when: (i) the evidence is related to manufacturing as opposed to agriculture; (ii) the analysis is at the firm level as opposed to sector level; and (iii) the evidence relates to South Asian countries as opposed to other world regions. Further findings from the narrative synthesis of the qualitative evidence indicate that the positive effect of innovation on employment is likely to be augmented by strong forward and backward linkages; but the adverse effects are likely to be exacerbated by capital-intensity of imports and weaknesses in governance and labour-market institutions.