Innovation and Employment | The Economist

“Nothing is more dangerous than a dogmatic worldview, and nothing is more restrictive, more blinding to innovation, and more destructive than openness to modernity.” Stephen Jay Gould.

Today, innovation is one of the most important drivers, not only of economic growth, but also of finding solutions to new problems faced by societies or new solutions to existing problems.

There is an assumption that innovation leads to changes in the employment structure, and, being always equipped with automation, it generates fear of possible job losses and the consequent deterioration in the financial well-being of large segments of the population, those whose industries or sectors of activity in which they work, are affected by these Processes.

But, if we consider at least the last century of innovations and at the same time analyze the unemployment trend, at the global level, it is clear that innovation does not necessarily lead to overall unemployment, which is observed with the regularity of unemployment levels in economies whose differences are more cyclical other (for example, inflation). It usually changes the nature of the business where innovation takes place, but at the same time it creates new jobs. This depends on the characteristics of public employment in the economy and on levels of organisation, formal conditions and current wage levels.

For example, the United States Postal Service had about 900,000 employees in 1999. In 2020, this number has decreased to 460,000 as a result of reduced use of this service for sending letters. Many of the unemployed had to find work in other sectors or service industries. But in 2021, the number of employees increased to 516,000. The growth of e-commerce caused this increase as nearly half of the 500 largest companies of total sales in 2020 in the United States reported that they use the postal service mostly as a means of delivery.

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In other cases, innovation completely leads to the disappearance of some types of jobs, but new jobs appear in other sectors, such as the case of the increased use of jobs in all logistics chains specifically related to e-commerce. These changes make clear action through public policies or private initiatives essential, that people who have lost their jobs acquire the skills and capabilities to re-employ themselves in other existing but dynamic or new expansive sectors, and that these jobs not only generate new ones. Employment opportunities, but also provided in appropriate conditions of security and income.

The economist Joseph Schumpeter referred to the destructive processes derived from innovation, which is in large part the motor of economic development, as the “perpetual wind of creative destruction.”

In the current environment, conditions and prospects for the development of the global economy and taking into account the current conditions and needs of the Mexican economy, it is necessary to have laws and public policies that favor innovation processes from educational centers and companies, with the clarification and continuous participation of the public and private sectors, so as to contribute to the generation of new models of economic growth, which, with The existence of appropriate public policies, which also contribute to improving wages and reducing inequality.

Betting on productive structures that are abandoned or that will inevitably have a tendency to deflate, will not only deepen weak growth, but will also increase the inequality structures that today prevent the sustainable growth and financial well-being of most families.

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CEO of Fibra Educa and Chairman of the Educational Savings Promotion Board

behavioral economics

The author is a political scientist, marketer, financier, behavioral economist and professor at UNAM School of Economics. CEO of Fibra Educa and Chair of the Educational Savings Promotion Board.

Follow him on Twitter: @martinezsolares

Aileen Morales

"Beer nerd. Food fanatic. Alcohol scholar. Tv practitioner. Writer. Troublemaker. Falls down a lot."

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