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OECD Development Centre Working Papers

The OECD Development Centre links OECD members with developing and emerging economies and fosters debate and discussion to seek creative policy solutions to emerging global issues and development challenges. This series of working papers is intended to disseminate the OECD Development Centre’s research findings rapidly among specialists in the field concerned. These papers are generally available in the original English or French, with a summary in the other language.

English, French

Mind the skills gap! Regional and industry patterns in emerging economies

Most emerging economies are characterised by lagging levels of productivity. While economic growth has been robust in much of the emerging world during the last two decades, it has generally been grounded on factor accumulation, with marginal contributions from productivity. With the economic literature pointing to human capital and skills as a key conduit of productivity, the inability of firms to find the skills they need appears as a key brake on development. This paper aims to identify the dimensions where this skill gap is more prevalent, particularly across emerging regions and industries. We devise an empirical analysis that uses two alternative specifications based on limited dependent variable analysis. The results place Latin America as the emerging region where firms have the greatest problems derived from the lack of adequate skills, well ahead of emerging Asia and Europe, but also of sub-Saharan Africa. In terms of sectors, two advanced manufacturing industries (machinery and motor vehicles) are particularly affected by this relative scarcity of adequately trained workers. Policy recommendations hinge on the need to solve the mismatch between the provision of skills by educational systems and the needs of the economy.

English

Keywords: productivity
JEL: O24: Economic Development, Innovation, Technological Change, and Growth / Development Planning and Policy / Development Planning and Policy: Trade Policy; Factor Movement; Foreign Exchange Policy; J24: Labor and Demographic Economics / Demand and Supply of Labor / Human Capital; Skills; Occupational Choice; Labor Productivity
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