Relationship between innovation and unemployment in emerging markets: A Dynamic Panel Data Analysis

The question of what the economic growth dynamics are has occupied the world of economics for many years. Technological development has significant importance in sustaining economic growth, in today's rapidly changing global economy. There is a general view in economic circles that economic growth supports employment. However, despite the global economic growth in recent years, the unemployment rate has not decreased. This situation brought the idea that while technological development contributed positively to economic growth, it negatively affected employment. Various studies have been conducted to examine the existence and strength of this contradiction through macro or sectoral data of different countries or country groups. Some countries in the group of developing countries are like developed economies due to several of their characteristics. The countries in this group, called Emerging Market Economies, are intermediate form as a combination between developed and developing economies. The growth rates and unemployment rates of the economies in this group are considerably high. In this study, the relationship between technological development and unemployment was examined by dynamic panel data analysis method, over the annual frequency data of 18 emerging market economies, including Turkey, between the years 1995-2019. According to the findings of the study, it was determined that unemployment increased due to technological development in emerging market economies during the reviewed periods. On the other hand, it has been observed that the power of technological development on unemployment is weak.