Globalization and Technological Innovation: Which Impact on the Rise of Unemployment?
Keywords:
globalization, technological innovation, unemployment, Non-ARDL framework
Abstract
This paper explores the asymmetric nexus between globalization, technological innovation and unemployment within non-linear Autoregressive Distributed Lag (NARDL) framework, Granger causality approach and forecast error variance decomposition technique, covering the period from 2000 to 2018, using quarterly data in Nigeria. To avoid variable omission bias, the study incorporated control variables. The findings showed that both the positive and negative shock of our variables of study indicate varying signs and magnitudes and there is a mixed presence of asymmetries among the nexus, as indicated in the variables for both short and long runs. The results implies that trade globalization, financial globalization and technological innovation biased process innovation contributed to the persistent increase in unemployment rate except technological innovation biased product innovation, which supported the unemployment reduction in Nigeria. These findings were not consistent with existing theories. The results based on the model and empirical data suggest that the authority needs to initiate socially suitable and economic schemes and strategies by ensuring effective and efficient connectivity between globalization and technology via integrating science, technology, research and development. Also, creating an enabling environment that supports and promotes sound and credible government institutions and education including adequate mechanism to ensure optimum utilization of scare resources and avoidance of embezzlement of these limited resources by corrupt officials.
References
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Andrews, D., Chiara, C., & Peter, N. Gal. (2016). The Best versus the Rest. OECD Productivity Working Papers, 5. https://doi.org/ 10.1787/63629cc9-en.
Anyanwu, J. C. (2014). Does Intra-African Trade Reduce Youth Unemployment in Africa? African Development Review, 26(2), 286–309. https://doi.org/10.1111/1467-8268.12082
Aremo, A. G., & Adele, A. M. (2010). Empirical Analysis of the Impact of Globalization on Labor Force Utilization: Evidence from Nigeria. African Economic and Business Review, 8(1).
Autor, D., David, D., Katz, L., Patter¬son, C., & John Van Reenen, J. V. (2017). Concentrating on the Fall of the Labor Share. W23108. Cambridge, MA: National Bureau of Economic Research. Retrieved from http://www.nber.org/papers/w23108.pdf
Awad, A., & Youssof, I. (2016). The Impact of Economic Globalization on Unemployment: The Malaysian Experience. The Journal of International Trade and Economic Development, 25(7), 938-958.
Balcerzak, A. P., & Zurek, M. (2011). Foreign Direct Investment and Unemployment: VAR Analysis for Poland in The Years 1995-2009. European Research Studies, 14(1), 3-14.
Bhattacharya, A., Bürkner, H., & Bijapurkar, A. (2016). What You Need to Know about Globalisation’s Radical New Phase. Retrieved from Boston Consulting Group Website www.bcgperspectives.com.content/articles/globalisation-growth-what-needknow-globalisation-radical-new-phase
Bogliacino, F., Piva, M., & Vivarelli, M. (2012). R&D and Employment: An Application of The LSDVC Estimator Using European Microdata. Economic Letters, 116(1), 56-59.
Chella, N., & Phiri, A. (2017). Long Run Co-Integration between Foreign Direct Investments, Domestic Investment and Unemployment in South Africa. Munich Personal Repec Archive Paper Number 82371. retrieved from https://mpra.ub.uni-muenchen.de/82371
Dachs, B., Hud, M., Koehler, C., & Peters, B. (2017). Employment Effects of Innovations over The Business Cycle: Firm-Level Evidence from European Countries. SPRU Working Paper Series. SPRU-University of Sussex, Brighton.
Daly, V., Ullah, F., Rauf, A., & Khan, G. Y. (2017). Globalization and Unemployment in Pakistan. 1-16.
Dritsakis, N., & Stamatiou, P. (2014). Exports, Foreign Direct Investment and Economic Growth for Five European Countries: Granger Causality Tests in Panel Data. Applied Economics Quarterly, 60(4), 253-272.
Elejalde, R., Giuliodori, D., & Stucchi, R. (2015). Employment and Innovation: Firm-Level Evidence from Argentina. Emerging Markets Finance and Trade, 51(1), 27–47.
Evangelista, R., & Savona, M. (2010). The Impact of Innovation On Employment In Services: Evidence from Italy. International Review of Applied Economics, 16(3), 309- 318.
Felbermayr, G., Julien, P., & Schmerer, H. (2011). Trade and Unemployment: What Do The Data Say? European Economic Review, 55, 741–758. http://doi:10.1016/j.euroecorev.2011.02.003.
Feldmann, H. (2013). Technological Unemployment in Industrial Countries. Journal of Evolutionary Economics, 1099-1126.
Fukao, K., Keuchi, K., Kim, Y. G., & Kwon, H. U. (2017). Innovation and Employment Growth in Japan: Analysis Based on Microdata from The Basic Survey Of Japanese Business Structure and Activities. Japanese Economic Review, 68(2), 200–216.
Görg, H., & Görlich, D. (2012). Trade and Labour Market Outcomes in Germany, In Lippoldt, D. (Ed), Policy Priorities for International Trade and Jobs, OECD. E-Publication. Retrieved from www.Oecd.Org/Trade/Icite
Harrison, R., Jaumandreu, J., Jacques, M., & Peters, B. (2014). Does Innovation Stimulate Employment? A Firm-Level Analysis Using Comparable Micro-Data from Four European Countries. International Journal of Industrial Organization, 35, 29- 43.
Helpman, E., & Itskhoki, O. (2010). Labor Market Rigidities, Trade and Unemployment. Review of Economic Studies, 77, 1100–1137. https://doi.org/10.1111/j.1467- 937x.2010.00600
Irpan, H. M., Saad, R. M., Nor, A. H. S. M., Noor, A. H. M., & Ibrahim, N. (2016). Impact of Foreign Direct Investment on the Unemployment Rate in Malaysia. Journal of Physics: Conference Series.
Janiak, A. (2013). Does Trade Liberalization Lead to Job Loss? Theory and Some Evidence. Retrieved 22 May, from http://www.riksbank.se/upload/dokument_riksbank/ kat_foa/janiak.pdf
Johnny, N., Timipere, E. T, Krokeme, O., & Markjackson, D. (2018). Impact of Foreign Direct Investment on Unemployment Rate in Nigeria (1980-2015). International Journal of Academic Research in Business and Social Science.
Kilic, C. (2015). Effects if Globalization on Economic Growth: Panel Data Analysis For Developing Countries. Economic Insight- Trend and Challenges, IV, 1-11.
Kim, J. (2011). The Effects of Trade on Unemployment: Evidence from 20 OECD Countries. Stockholm: Department of Economics, Stockholm University.
Krugman, P. (2012). Capital-Biased Technological Progress: An Example (Wonkish). [Blog] New York Times Blog. Retrieved Aug. 23, 2017 from Https://Krugman.Blogs.Nytimes.Com/2012/12/26/Capital- Biasedtechnological- Progress-An-Example-Wonkish
Lachenmaier, S., & Rottmann, H. (2011). Effects of Innovation on Employment: A Dynamic Panel Analysis. Int. J. Ind. Organ., 29, 210–220.
Lipsey, R. E., Sjöholm, F., & Sun, J. (2010). Foreign Ownership and Employment Growth in Indonesian Manufacturing, NBER Working Paper, No. 15936.
Matthew, A. O., & Ogunlusi, T. (2017). Foreign Direct Investment and Employment Generation in Nigeria. Proceedings of ADVED 2017- 3rd International Conference on Advances in Education and Social Sciences 9-11 October, Istanbul, Turkey, 1078-1088.
Matuzeviciute, K., Butkus. M., & Karaliute, A. (2017). Do Technological Innovations Affect Unemployment? Some Empirical Evidence from European Countries Economies. MDPI.
Meidani, N. A., & Zabihi, M. (2012). The Dynamic Effect of Globalization in Unemployment Rate in Iran: A Co-Integration Analysis. International Business Research.
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.
Okumu, I. M., Baale, E., & Guloba, M. M. (2019). Innovation and Employment Growth: Evidence From Manufacturing Firms in Africa. Journal of Innovation and Entrepreneurship.
Onanuga, A. T., & Onanuga, O. T. (2018). Government Policy, Foreign Direct Investment And Unemployment in Emerging Economiesacta, Universitatis Danubius. Œconomica, 14(2).
Orji, A., Nwosu, E. O., Onyinye, I., & Mba, P. N. (2016). ICT Usage and Unemployment Rate Nexus in Nigeria: An Empirical Analysis. Journal of Internet Banking and Commerce. Retrieved from http://www.icommercecentral.com
Pantea, S., Sabadash, A., & Biagi, F. (2017). Are ICT Displacing Workers In The Short Run? Evidence from Seven European Countries. Inf. Econ. Policy, 39, 36–44.
Pesaran, M. H., & Shin, Y. (1999). An Autoregressive Distributed Lag Modeling Approach to Cointegration Analysis. In Econometrics and Economic Theory in the 20th Century: The Ragnar Frisch centennial symposium, Edited by S. Strom. Cambridge: Cambridge University Press.
Pesaran, M. H., Shin, Y., & Smith, R. J. (2001) Bounds Testing Approaches to the Analysis of Level Relationships. Journal of Applied Econometrics, 16, 289-326.
Piva, M., & Vivarelli, M (2017). Technological Change and Employment: Were Ricardo and Marx Right? IZA Institute, Labor Economics Discussion Paper Series No. 10471.
Qadri, B., & Bhat, M. (2018). Interface between Globalization and Technology. Asian Journal of Managerial Science, 7(3), 1-6. retrieved from www.trp.org.in
Raifu, I. A. (2017). On the Determinants of Unemployment in Nigeria: What are the Roles of Irade Openness and Current Account Balance? Review of Innovation and Competitiveness: Journal of Economic and Social Research, 3(4), 5-30.
Raji, R. O. (2019). Issues of Unemployment in Nigeria; Effect of Real Exchange Rate and Inflation Interaction, Quarterly Journal of Econometrics Research, 5(1), 17-28.
Sepehrdoust, H., & Khodaee, H. (2013). The Impact of Information and Communication Technology on Employment of Selected OIC Countries. African Journal of Business Management, 7, 4149-4154.
Shaar, S. M., Hussain, E. N., & Halim, S. M. (2012). Impact of Foreign Direct Investment on Unemployment Rate and Economic Growth in Malaysia. Journal of Applied Science Research, 8(9), 4900-4906.
Shin, Y., Yu, Greenwood, B., & Nimmo, M. (2011). Modeling Asymmetric Cointegration and Dynamic Multiplier in a Nonlinear ARDL Framework, Mimeo.
Stewart, I., Debapratim, D. & Alex, C. (2015). Technol¬ogy and People: The Great Job- Creatingmachine. Retrieved from https://www2.deloitte.com/uk/en/pages/finance/articles/technology-and-people.html
Strata, V. A., Davidescu, A. A., & Paul, A. M. (2014). FDI and The Unemployment - A Causality Analysis for The Latest EU Members. 2nd Global Conference on Business, Economics, Management and Tourism, 30-31 October, Prague, Czech Republic. Retrieved from www.sciencedirect.com
Vashisht, P. (2017). Destruction or Polarization: Estimating the Impact of Technology on Jobs in Indian Manufacturing. Indian Council for Research on International Economic Relations Working Paper No.334. Zdravkovic, A., Dukic, M. and Bradic-Martinovic, A. (2017). Impact of FDI on Unemployment in Transition Countries: Panel Co-Integration Approach. Industrija, 45(1), 161-174.
Zeb, N., & Qiang, F. (2014). Foreign Direct Investment and Unemployment Reduction in Pakistan. International Journal of Economics and Research, 5(02), 10-17.
Andrews, D., Chiara, C., & Peter, N. Gal. (2016). The Best versus the Rest. OECD Productivity Working Papers, 5. https://doi.org/ 10.1787/63629cc9-en.
Anyanwu, J. C. (2014). Does Intra-African Trade Reduce Youth Unemployment in Africa? African Development Review, 26(2), 286–309. https://doi.org/10.1111/1467-8268.12082
Aremo, A. G., & Adele, A. M. (2010). Empirical Analysis of the Impact of Globalization on Labor Force Utilization: Evidence from Nigeria. African Economic and Business Review, 8(1).
Autor, D., David, D., Katz, L., Patter¬son, C., & John Van Reenen, J. V. (2017). Concentrating on the Fall of the Labor Share. W23108. Cambridge, MA: National Bureau of Economic Research. Retrieved from http://www.nber.org/papers/w23108.pdf
Awad, A., & Youssof, I. (2016). The Impact of Economic Globalization on Unemployment: The Malaysian Experience. The Journal of International Trade and Economic Development, 25(7), 938-958.
Balcerzak, A. P., & Zurek, M. (2011). Foreign Direct Investment and Unemployment: VAR Analysis for Poland in The Years 1995-2009. European Research Studies, 14(1), 3-14.
Bhattacharya, A., Bürkner, H., & Bijapurkar, A. (2016). What You Need to Know about Globalisation’s Radical New Phase. Retrieved from Boston Consulting Group Website www.bcgperspectives.com.content/articles/globalisation-growth-what-needknow-globalisation-radical-new-phase
Bogliacino, F., Piva, M., & Vivarelli, M. (2012). R&D and Employment: An Application of The LSDVC Estimator Using European Microdata. Economic Letters, 116(1), 56-59.
Chella, N., & Phiri, A. (2017). Long Run Co-Integration between Foreign Direct Investments, Domestic Investment and Unemployment in South Africa. Munich Personal Repec Archive Paper Number 82371. retrieved from https://mpra.ub.uni-muenchen.de/82371
Dachs, B., Hud, M., Koehler, C., & Peters, B. (2017). Employment Effects of Innovations over The Business Cycle: Firm-Level Evidence from European Countries. SPRU Working Paper Series. SPRU-University of Sussex, Brighton.
Daly, V., Ullah, F., Rauf, A., & Khan, G. Y. (2017). Globalization and Unemployment in Pakistan. 1-16.
Dritsakis, N., & Stamatiou, P. (2014). Exports, Foreign Direct Investment and Economic Growth for Five European Countries: Granger Causality Tests in Panel Data. Applied Economics Quarterly, 60(4), 253-272.
Elejalde, R., Giuliodori, D., & Stucchi, R. (2015). Employment and Innovation: Firm-Level Evidence from Argentina. Emerging Markets Finance and Trade, 51(1), 27–47.
Evangelista, R., & Savona, M. (2010). The Impact of Innovation On Employment In Services: Evidence from Italy. International Review of Applied Economics, 16(3), 309- 318.
Felbermayr, G., Julien, P., & Schmerer, H. (2011). Trade and Unemployment: What Do The Data Say? European Economic Review, 55, 741–758. http://doi:10.1016/j.euroecorev.2011.02.003.
Feldmann, H. (2013). Technological Unemployment in Industrial Countries. Journal of Evolutionary Economics, 1099-1126.
Fukao, K., Keuchi, K., Kim, Y. G., & Kwon, H. U. (2017). Innovation and Employment Growth in Japan: Analysis Based on Microdata from The Basic Survey Of Japanese Business Structure and Activities. Japanese Economic Review, 68(2), 200–216.
Görg, H., & Görlich, D. (2012). Trade and Labour Market Outcomes in Germany, In Lippoldt, D. (Ed), Policy Priorities for International Trade and Jobs, OECD. E-Publication. Retrieved from www.Oecd.Org/Trade/Icite
Harrison, R., Jaumandreu, J., Jacques, M., & Peters, B. (2014). Does Innovation Stimulate Employment? A Firm-Level Analysis Using Comparable Micro-Data from Four European Countries. International Journal of Industrial Organization, 35, 29- 43.
Helpman, E., & Itskhoki, O. (2010). Labor Market Rigidities, Trade and Unemployment. Review of Economic Studies, 77, 1100–1137. https://doi.org/10.1111/j.1467- 937x.2010.00600
Irpan, H. M., Saad, R. M., Nor, A. H. S. M., Noor, A. H. M., & Ibrahim, N. (2016). Impact of Foreign Direct Investment on the Unemployment Rate in Malaysia. Journal of Physics: Conference Series.
Janiak, A. (2013). Does Trade Liberalization Lead to Job Loss? Theory and Some Evidence. Retrieved 22 May, from http://www.riksbank.se/upload/dokument_riksbank/ kat_foa/janiak.pdf
Johnny, N., Timipere, E. T, Krokeme, O., & Markjackson, D. (2018). Impact of Foreign Direct Investment on Unemployment Rate in Nigeria (1980-2015). International Journal of Academic Research in Business and Social Science.
Kilic, C. (2015). Effects if Globalization on Economic Growth: Panel Data Analysis For Developing Countries. Economic Insight- Trend and Challenges, IV, 1-11.
Kim, J. (2011). The Effects of Trade on Unemployment: Evidence from 20 OECD Countries. Stockholm: Department of Economics, Stockholm University.
Krugman, P. (2012). Capital-Biased Technological Progress: An Example (Wonkish). [Blog] New York Times Blog. Retrieved Aug. 23, 2017 from Https://Krugman.Blogs.Nytimes.Com/2012/12/26/Capital- Biasedtechnological- Progress-An-Example-Wonkish
Lachenmaier, S., & Rottmann, H. (2011). Effects of Innovation on Employment: A Dynamic Panel Analysis. Int. J. Ind. Organ., 29, 210–220.
Lipsey, R. E., Sjöholm, F., & Sun, J. (2010). Foreign Ownership and Employment Growth in Indonesian Manufacturing, NBER Working Paper, No. 15936.
Matthew, A. O., & Ogunlusi, T. (2017). Foreign Direct Investment and Employment Generation in Nigeria. Proceedings of ADVED 2017- 3rd International Conference on Advances in Education and Social Sciences 9-11 October, Istanbul, Turkey, 1078-1088.
Matuzeviciute, K., Butkus. M., & Karaliute, A. (2017). Do Technological Innovations Affect Unemployment? Some Empirical Evidence from European Countries Economies. MDPI.
Meidani, N. A., & Zabihi, M. (2012). The Dynamic Effect of Globalization in Unemployment Rate in Iran: A Co-Integration Analysis. International Business Research.
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.
Okumu, I. M., Baale, E., & Guloba, M. M. (2019). Innovation and Employment Growth: Evidence From Manufacturing Firms in Africa. Journal of Innovation and Entrepreneurship.
Onanuga, A. T., & Onanuga, O. T. (2018). Government Policy, Foreign Direct Investment And Unemployment in Emerging Economiesacta, Universitatis Danubius. Œconomica, 14(2).
Orji, A., Nwosu, E. O., Onyinye, I., & Mba, P. N. (2016). ICT Usage and Unemployment Rate Nexus in Nigeria: An Empirical Analysis. Journal of Internet Banking and Commerce. Retrieved from http://www.icommercecentral.com
Pantea, S., Sabadash, A., & Biagi, F. (2017). Are ICT Displacing Workers In The Short Run? Evidence from Seven European Countries. Inf. Econ. Policy, 39, 36–44.
Pesaran, M. H., & Shin, Y. (1999). An Autoregressive Distributed Lag Modeling Approach to Cointegration Analysis. In Econometrics and Economic Theory in the 20th Century: The Ragnar Frisch centennial symposium, Edited by S. Strom. Cambridge: Cambridge University Press.
Pesaran, M. H., Shin, Y., & Smith, R. J. (2001) Bounds Testing Approaches to the Analysis of Level Relationships. Journal of Applied Econometrics, 16, 289-326.
Piva, M., & Vivarelli, M (2017). Technological Change and Employment: Were Ricardo and Marx Right? IZA Institute, Labor Economics Discussion Paper Series No. 10471.
Qadri, B., & Bhat, M. (2018). Interface between Globalization and Technology. Asian Journal of Managerial Science, 7(3), 1-6. retrieved from www.trp.org.in
Raifu, I. A. (2017). On the Determinants of Unemployment in Nigeria: What are the Roles of Irade Openness and Current Account Balance? Review of Innovation and Competitiveness: Journal of Economic and Social Research, 3(4), 5-30.
Raji, R. O. (2019). Issues of Unemployment in Nigeria; Effect of Real Exchange Rate and Inflation Interaction, Quarterly Journal of Econometrics Research, 5(1), 17-28.
Sepehrdoust, H., & Khodaee, H. (2013). The Impact of Information and Communication Technology on Employment of Selected OIC Countries. African Journal of Business Management, 7, 4149-4154.
Shaar, S. M., Hussain, E. N., & Halim, S. M. (2012). Impact of Foreign Direct Investment on Unemployment Rate and Economic Growth in Malaysia. Journal of Applied Science Research, 8(9), 4900-4906.
Shin, Y., Yu, Greenwood, B., & Nimmo, M. (2011). Modeling Asymmetric Cointegration and Dynamic Multiplier in a Nonlinear ARDL Framework, Mimeo.
Stewart, I., Debapratim, D. & Alex, C. (2015). Technol¬ogy and People: The Great Job- Creatingmachine. Retrieved from https://www2.deloitte.com/uk/en/pages/finance/articles/technology-and-people.html
Strata, V. A., Davidescu, A. A., & Paul, A. M. (2014). FDI and The Unemployment - A Causality Analysis for The Latest EU Members. 2nd Global Conference on Business, Economics, Management and Tourism, 30-31 October, Prague, Czech Republic. Retrieved from www.sciencedirect.com
Vashisht, P. (2017). Destruction or Polarization: Estimating the Impact of Technology on Jobs in Indian Manufacturing. Indian Council for Research on International Economic Relations Working Paper No.334. Zdravkovic, A., Dukic, M. and Bradic-Martinovic, A. (2017). Impact of FDI on Unemployment in Transition Countries: Panel Co-Integration Approach. Industrija, 45(1), 161-174.
Zeb, N., & Qiang, F. (2014). Foreign Direct Investment and Unemployment Reduction in Pakistan. International Journal of Economics and Research, 5(02), 10-17.
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2020-12-31
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