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 (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.

Bibliographic Details

Main Authors:	Kessides, Ioannis, Dutz, Mark A., O'Connell, Stephen, Willig, Robert D.
Language:	English
Published:	2011-10-01
Subjects:	ACCESS TO INFORMATION, ACCOUNTS PAYABLE, AGE GROUP, AGGREGATE EMPLOYMENT, BORROWING, BUSINESS ACTIVITIES, BUSINESS ASSOCIATION, BUSINESS ASSOCIATIONS, BUSINESS ENVIRONMENT, BUSINESS ENVIRONMENTS, BUSINESS INDICATORS, BUSINESS INFORMATION, BUSINESS INFRASTRUCTURE, BUSINESS INPUTS, BUSINESS REGULATIONS, BUSINESS SERVICES, BUSINESSES, CASH FLOW, CHAMBER OF COMMERCE, COBB-DOUGLAS PRODUCTION FUNCTION, COMMERCIAL BANKS, COMMUNICATION TECHNOLOGIES, COMPANY, COMPETITION POLICY, COMPETITIVE ADVANTAGE, COMPETITIVE MARKET, COMPETITIVE MARKETS, COMPETITOR, COMPETITORS, COMPUTERS, CONCEPTUAL FRAMEWORK, CORPORATIONS, CROSS-SECTIONAL DATA, DATA NETWORKS, DEBT, DISPLACEMENT, DISPLACEMENT EFFECTS, DISTRIBUTION CHANNELS, E-MAIL, ECONOMETRIC ESTIMATES, ECONOMIC GROWTH, ECONOMIC THEORY, ECONOMICS, EMPIRICAL EVIDENCE, EMPIRICAL RESEARCH, EMPLOYEE, EMPLOYMENT EFFECTS, EMPLOYMENT GROWTH, EMPLOYMENT GROWTH RATE, EMPLOYMENT GROWTH RATES, EMPLOYMENT OPPORTUNITIES, EMPLOYMENT REDUCTION, EMPLOYMENT SHARE, ENTERPRISE RESOURCE PLANNING, ENTERPRISE SIZE, ENTERPRISE SURVEY, ENTERPRISE SURVEYS, ENTREPRENEURIAL ACTIVITY, ENTREPRENEURS, ENTREPRENEURSHIP, ENTRY BARRIER, ENTRY BARRIERS, ENVIRONMENTS, EQUIPMENT, ERP, EXPANSION, EXPANSIONS, EXPORT MARKETS, EXPORT OPPORTUNITIES, FINANCIAL CONSTRAINTS, FINANCIAL INSTITUTION, FINANCIAL INSTITUTIONS, FINANCIAL INVESTMENT, FINANCIAL SERVICES, FIRM LEVEL, FIRM PRODUCTIVITY, FIRM SURVIVAL, FIRM-SPECIFIC KNOWLEDGE, FIRMS, FOREIGN CURRENCY, FOREIGN OWNERSHIP, FOREIGN PARTNER, GLOBAL ECONOMY, GLOBALIZATION, GOVERNMENT REGULATIONS, INCOME, INCOME INEQUALITIES, INFORMATION TECHNOLOGIES, INNOVATION, INNOVATION POLICIES, INNOVATION POLICY, INNOVATIONS, INPUT FACTORS, INTANGIBLE ASSETS, INTELLECTUAL PROPERTY, INTERNATIONAL COMPETITIVENESS, INTERNATIONAL TRADE, INVENTORY, JOB CREATION, JOB TRAINING, JOINT VENTURE, JOINT VENTURES, LABOR COSTS, LABOR DEMAND, LABOR PRODUCTIVITY, LEGAL SYSTEM, LICENSES, LICENSING, LISTED COMPANY, LIVING STANDARDS, LOCAL BUSINESS, LOW-WAGE EMPLOYMENT, MANUFACTURING, MANUFACTURING ESTABLISHMENTS, MARGINAL COST, MARGINAL COSTS, MARKET ACCESS, MARKET COMPETITION, MARKET DEMAND, MARKET OPPORTUNITIES, MARKET OPPORTUNITY, MARKET POWER, MARKETING, MATERIAL, MULTINATIONALS, NEGATIVE EXTERNALITIES, NEW TECHNOLOGIES, NEW TECHNOLOGY, OPEN ACCESS, ORGANIZATIONAL CAPITAL, OUTPUTS, PAYING JOBS, PERMANENT WORKERS, PHYSICAL INFRASTRUCTURE, POLICY SUPPORT, PRESENT EVIDENCE, PREVIOUS WORK, PRICE ELASTICITIES, PRIVATE SECTOR, PROCESS INNOVATION, PROCESS INNOVATIONS, PROCUREMENT, PRODUCT INNOVATION, PRODUCT INNOVATIONS, PRODUCT MARKET, PRODUCT MARKET COMPETITION, PRODUCTION COSTS, PRODUCTION TECHNOLOGY, PRODUCTION WORKERS, PRODUCTIVITY GAINS, PROPERTY RIGHTS, QUALITY STANDARDS, R&D, REGULATORY REQUIREMENTS, RESULT, RESULTS, SKILLED EMPLOYEES, SKILLED WORKERS, SMALL FIRMS, SUPPLIERS, TARGETS, TECHNOLOGICAL ADVANCE, TECHNOLOGICAL PROGRESS, TECHNOLOGY DEVELOPMENT, TOTAL EMPLOYMENT, TOTAL FACTOR PRODUCTIVITY, TOTAL WAGES, TRAINING PROGRAM, TRAINING PROGRAMS, UNEMPLOYED, UNEMPLOYED PERSONS, UNEMPLOYMENT, UNINTENDED CONSEQUENCES, UNSKILLED JOBS, UNSKILLED LABOR, UNSKILLED WORKERS, USES, WAGE INEQUALITY, WAGE LEVELS, WAGE RATE, WAGE RATES, WAGES, WEB, WORK FORCE, WORKER,
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 https://hdl.handle.net/10986/3618
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