Technology, TFPG and Employment: A Panel Data Analysis

Abstract

This paper based on the United Nations Industrial Development Organization (UNIDO) panel data set makes an attempt to estimate total factor productivity growth (TFPG) across countries. Productivity convergence over time is evident when countries are divided across regions which could be attributed to a greater degree of association of countries in a given region pursuing joint efforts for infrastructural development, ICT coverage and advancement, trade negotiations, technology acquisition and innovation, and inflow of FDI. In terms of efficiency estimates for select years, most of the countries are seen to be operating much below the frontier. This is indicative of the fact that countries are keen to pursue resource-driven growth in an attempt to maximize it. Based on the inter-temporal data, we observed that a number of countries registered either a negative or a positive but low correlation between labour productivity growth and TFPG. Evidently, countries are engaged in greater mechanization which may be raising labour productivity without ushering in much success in terms of TFPG. From panel data regression, the impact of technology perceived in terms of TFPG, on employment, is seen to be negligible though it is important to note that none of the groups, income or region-wise, recorded a statistically significant negative effect except the least developed countries (LDCs), while the significant cases (howsoever scanty) reveal a positive association. Appropriate incentives may motivate firms to experience technological progress and employment growth both.