Synergistic Effects of Trade Liberalization and Technological Innovation on Employment Growth in Emerging Economies: Evidence from a Panel‑ARDL Approach
DOI:
https://doi.org/10.51137/wrp.ijarbm.453Keywords:
Trade Openness, Technological Innovation, Employment Dynamics, Emerging Economies, Panel ARDLAbstract
This study investigates the dynamic interplay between trade openness, technological innovation, and employment in emerging economies using a panel ARDL framework. Employing data from a balanced panel of emerging economies over the period 1995–2022, the analysis decomposes short run and long run effects, examines interaction and asymmetric relationships, and explores sectoral heterogeneity in trade flows. The results indicate that trade openness significantly enhances employment in the long run, with technological innovation amplifying these effects through complementary mechanisms. Human capital is found to strengthen the capacity of economies to convert trade and innovation gains into employment. Export-oriented sectors exhibit stronger employment effects than imports, and positive shocks in trade and innovation produce greater labour-market gains than negative shocks, reflecting non-linear adjustment dynamics. These findings underscore the importance of coordinated policy strategies that integrate trade facilitation, innovation promotion, and skill development to maximize inclusive employment growth. The study contributes to the literature by providing robust empirical evidence on the synergistic effects of globalization and technological upgrading in emerging economies.
References
Almulhim, A. A., & Qamruzzaman, M. (2025). The influence of green trade openness, natural resources rent, institutional quality, and R&D investment on environmental sustainability in the OECD: Testing the EKC and LCC hypotheses. Frontiers in Environmental Science, 13. https://doi.org/10.3389/fenvs.2025.1572439
Alonso Soto, D. (2020). Technology and the future of work in emerging economies: What is different. OECD Social, Employment and Migration Working Papers, No. 236. https://doi.org/10.1787/55354f8f-en
Asravor, R. K., & Brown, D. (2023). Impact of technology on macro-level employment and the environment: Evidence from Ghana. Frontiers in Environmental Science. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC10211284/
Attiaoui, C., & Boufateh, A. (2019). Income inequality, poverty reduction, and energy consumption: Evidence from panel ARDL. Ekonomika, 101(1), 71–87. https://doi.org/10.3326/ekon.101.1
Bilal, A., Li, X., Zhu, N., Sharma, R., & Jahanger, A. (2022). Green technology innovation, globalization, and CO₂ emissions: Recent insights from the OBOR economies. Sustainability, 14(1), 236. https://doi.org/10.3390/su14010236
Bouattour, A., Kalai, M., & Helali, K. (2024). Threshold effects of technology import on industrial employment: A panel smooth transition regression approach. Journal of Economic Structures, 13, Article 1. https://doi.org/10.1186/s40008-023-00322-x
Bousrih, J., Elhaj, M., & Hassan, F. (2022). The labor market in the digital era: What matters for the Gulf Cooperation Council countries? Frontiers in Sociology, 7. https://doi.org/10.3389/fsoc.2022.959091
Dağlı, İ. (2022). The rise of technology for the future labor force: The nexus between technology and unemployment in OECD countries. Çalışma ve Toplum, 24, 2775–2794. https://doi.org/10.54752/ct.1191460
Dang, D. A. (2020). Technology imports and employment in developing countries (Discussion Paper). ERIA. https://www.eria.org/uploads/media/discussion-papers/Technology-Imports-and-Employment-in-Developing-Countries.pdf
Dasgupta, S. (2024). Digitalization and employment. International Labour Organization. https://www.ilo.org/wcmsp5/groups/public/---ed_emp/documents/publication/wcms_854353.pdf
Dempere, J., Qamar, M., Allam, H., & Malik, S. (2023). The impact of innovation on economic growth, foreign direct investment, and self-employment: A global perspective. Economies, 11(7), 182. https://doi.org/10.3390/economies11070182
Díaz Pavez, L. R., & Martínez Zarzoso, I. (2023). The impact of local and foreign automation on labor market outcomes in emerging countries. The World Economy, 47(1), 298–331. https://hdl.handle.net/10419/288187
Dieppe, A., et al. (2021). The technology–employment trade-off: Automation, industry, and income effects. World Bank Policy Research Working Paper. https://documents1.worldbank.org/curated/en/595681611845186942
Ganuthula, V. R. R., & Balaraman, K. K. (2025). Skill-based labor market polarization in the age of AI: A comparative analysis of India and the United States. arXiv. https://arxiv.org/abs/2501.15809
Góes, C., Lopez Acevedo, G., & Robertson, R. (2023). Gender-segmented labor markets and foreign demand shocks. arXiv. https://arxiv.org/abs/2301.09252
Hwang, K., & Han, J. (2024). Employment shift in response to a technology shock: Price and wage rigidities with heterogeneous agents. Economies, 12(11), 303. https://doi.org/10.3390/economies12110303
Ibey, A. M. Y. (2025). The symmetric and asymmetric impact of trade openness, foreign direct investment, and technological change on economic growth. Cogent Economics & Finance. https://doi.org/10.1080/23322039.2025.2528444
Kaggwa, S., Akinwolemiwa, D. I., Dawodu, S. O., Uwaoma, P. U., Akindote, O. J., & Eloghosa, S. O. (2023). Digital transformation and economic development: A review of emerging technologies’ impact on national economies. World Journal of Advanced Research and Reviews, 20(3), 888–905. https://doi.org/10.30574/wjarr.2023.20.3.2541
Khan, M. N., et al. (2023). Do domestic innovations promote trade openness? Empirical evidence from emerging economies. Journal of Innovation and Entrepreneurship, 14, Article 9. https://doi.org/10.1186/s13731-024-00450-z
Kindberg Hanlon, G. (2021). The technology–employment trade-off: Automation, industry, and income effects. World Bank Policy Research Working Paper. https://openknowledge.worldbank.org/handle/10986/35102
Lall, S., & Streeten, P. (1984). Foreign investment, transnationals, and developing countries. Macmillan.
Loganathan, N., & Esmail, H. A. H. (2024). Impact of green technology and energy on green economic growth: Role of FDI and globalization in G7 economies. Future Business Journal, 10, Article 43. https://doi.org/10.1186/s43093-024-00329-1
Medase, S. K., & Wyrwich, M. (2022). The role of innovation for employment growth among firms in developing countries: Evidence from Nigeria. African Journal of Science, Technology, Innovation & Development, 14(3), 610–619. https://doi.org/10.1080/20421338.2021.1877417
Micco, A. (2019). Automation, labor markets, and trade (Working Paper No. 486). University of Chile. https://ideas.repec.org/p/udc/wpaper/wp486.html
Nwaka, I. D., Uma, K. E., & Tuna, G. (2015). Trade openness and unemployment: Empirical evidence for Nigeria. The Economic and Labour Relations Review, 26(1), 117–136. https://doi.org/10.1177/1035304615571225
OECD. (2018). Addressing labour market disruptions from trade and automation. In OECD Economic Surveys: United States 2018. https://doi.org/10.1787/eco_surveys-usa-2018-en
OECD. (2018). Good jobs for all in a changing world of work: The OECD jobs strategy. https://doi.org/10.1787/9789264308817-en
OECD. (2018). Market opening, growth and employment. OECD Trade Policy Papers, No. 214. https://doi.org/10.1787/8a34ce38-en
Oloyede, B. M., Osabuohien, E. S., & Ejemeyovwi, J. O. (2021). Trade openness and economic growth in Africa’s regional economic communities: Empirical evidence from ECOWAS and SADC. Heliyon, 7(5), e06996. https://doi.org/10.1016/j.heliyon.2021.e06996
Pesaran, M. H., & Smith, R. (1995). Estimating long-run relationships from dynamic heterogeneous panels. Journal of Econometrics, 68(1), 79–113.
Pesaran, M. H., Shin, Y., & Smith, R. J. (1999). Pooled mean group estimation of dynamic heterogeneous panels. Journal of the American Statistical Association, 94(446), 621–634. https://doi.org/10.1080/01621459.1999.10474156
Polat, B., & Rodríguez Andrés, A. (2023). Trade openness, labour market rigidity, and economic growth: A dynamic panel data analysis. The Economic and Labour Relations Review. https://doi.org/10.1017/S103530462300008X
Rethany, S., Said, R., & Zhao, Y. (2023). The effect of the digital economy on the employment structure in China. Economies, 11(9), 227. https://doi.org/10.3390/economies11090227
Robertson, R. (2020). Local labor market effects of trade shocks in developing countries: Evidence and policy responses. IZA / World Bank Conference Paper. https://conference.iza.org/conference_files/worldbank_2020/robertson_r3589.pdf
Seti, T. M., Mazwane, S., & Christian, M. (2025). Financial openness, trade openness, and economic growth nexus: A dynamic panel analysis for emerging and developing economies. Journal of Risk and Financial Management, 18(2), 78. https://doi.org/10.3390/jrfm18020078
Shin, Y., Yu, B., & Greenwood-Nimmo, M. (2014). Modelling asymmetric cointegration and dynamic multipliers in a nonlinear ARDL framework. In Festschrift in Honor of Peter Schmidt (pp. 281–314). Springer.
Sime, Z., & Tadesse, G. (2025). The impact of firm-level innovation on labor productivity and employment in selected African countries. Journal of Innovation and Entrepreneurship, 14, Article 9. https://doi.org/10.1186/s13731-024-00450-z
Sun, J., & Qamruzzaman, M. (2024). Technological innovation, trade openness, natural resources, clean energy, and environmental sustainability: Evidence from BRICS+T countries. Frontiers in Environmental Science, 12. https://doi.org/10.3389/fenvs.2024.1520562
International Labour Organization. (2025). Digital transformation in employment policies. International Labour Organization. https://www.ilo.org/sites/default/files/2025-01/Digital%20transformation%20in%20employment%20policies%20FINAL.pdf
Zhang, H. (2021). Trade openness and green total factor productivity in China: The role of ICT-based digital trade. Frontiers in Environmental Science, 9. https://doi.org/10.3389/fenvs.2021.809339
Zhu, Y., Jahan, S., & Qamruzzaman, M. (2024). Technological innovation, trade openness, natural resources, and environmental sustainability in Egypt and Turkey. Sustainability, 16(19), 8643. https://doi.org/10.3390/su16198643
Downloads
Published
Issue
Section
License
Copyright (c) 2025 Adedeji Daniel Gbadebo (Author)
This work is licensed under a Creative Commons Attribution 4.0 International License.
