R&D and Innovation Key to Long-term Job Creation for Asia - ADB Study

BEIJING, PEOPLE'S REPUBLIC OF CHINA – As Asian economies continue to improve their relative comparative advantage in exporting sectors, it is also important to increase competitiveness and productivity through more research and development (R&D) and innovation – two essential elements for sustainable wage growth and job creation in the region, a new study by the Asian Development Bank (ADB) suggests.

Trade and Employment in Asia, launched today at ADB's Resident Mission in the People's Republic of China (PRC), book reviews empirical evidence on labor-market effects of trade through multi-country studies complemented by detailed case studies of five Asian economies including the PRC; Hong Kong, China; Indonesia; the Republic of Korea; and Malaysia.

Export-oriented sectors have historically generated employment in the region and associated with improved working conditions. However, as structural transformation changes the industrial patterns, exporting sectors would need to focus on job quality. In the PRC, for example, export-related jobs are no longer the best-quality jobs in terms of wages and work hours and see higher turnover rates.

“Despite negative stories on export-related jobs, the study shows clearly that there are direct and indirect benefits from trade for the economy. Average wages in Asia have increased significantly, while industrial accident rate and child labor incidence declined,” ADB Economist Niny Khor said.

While trade has provided greater employment opportunities in the past, structural transformation in Asian economies meant that they have to prepare for changes. Government policies can help, by increasing workers’ human capital through schooling, training and R&D, and improving productivity especially in the services sector.