Export-led Jobless Growth in Emerging Industrial Economies: A Study of Regionally Leading Countries in Manufacturing Industries

Abstract

When the export-led growth model is combined with the Okun’s law, it is naturally predicted that export expansion, as one the key components of economic growth, improves the general employment level by creating new job opportunities in the overall economy. For testing the validity of this hypothesized linkage, the existing studies have focused on emerging industrial economies (EIEs) that have been recording considerable achievements towards the export-led growth strategy especially during the past two decades but recently experiencing persistently high unemployment challenge. Nevertheless, the extant literature has not paid enough attention to this paradoxical observation which can be attributed to the paradigm of the export-led jobless growth. Therefore, this paper tests the validity of the export-led jobless growth phenomenon for EIEs in the case of six important exporters of manufactures that are leading in their regions: China (East Asia), Poland (Europe), Mexico (South America), India (South Asia), South Africa (Africa), and Turkey (Europe and Middle East). Consequently, three models (general growth model, unemployment model and, export-led jobless growth model) are estimated separately utilizing an annual panel data set which covers a 26-year period spanning from 1991 to 2016. Results reveal an inconclusive evidence for the export-led jobless growth phenomenon that export does not have any significant impact on growth but it is positively and significantly associated with unemployment whilst economic growth tends to lower the unemployment. Based on the jobless export findings the study discusses several initiatives for policy-makers and future research.