5 Ways to Create More Jobs in Middle-Income Countries

Job creation is always a core issue, regardless of the state of a given national economy. When developing nations reach middle-income status, more well-paying jobs need to be created to match rising aspirations and human development levels. 

Guaranteeing a sufficient quantity of well-paying jobs can be an immense challenge for policymakers, and it’s something that even high-income economies often struggle with. The stakes can be higher for middle-income countries, however, as the lack of locally available jobs can easily lead to job stagnation and brain drains that can seriously impede domestic productivity and innovation. Worse still, high employment rates are often tied to political instability, further hampering an economy’s potential.

Fortunately, the question of how to increase the availability of high-quality jobs is something that academics and policy planners the world over have always grappled with. No economy has ever perfectly handled job creation, but successful countries tend to do several things in common. In this short guide, we’ll look at the strategies that policymakers around the world have used to create consistent growth in employment within their jurisdictions. 

1. Develop Digital Infrastructure

Popular notions of infrastructure development tend to involve such essentials as transportation networks, waterworks, and energy systems. While these are important, they are no longer the only types of infrastructure policymakers need to emphasize for stoking job creation. Digital infrastructure is especially important since it effectively decentralizes many kinds of service jobs wherever it is available. 

Given this, policymakers must advocate for the development of digital communications networks along the usual road, rail, and airport projects. With a stronger digital communications backbone, middle-income economies can create an environment that’s truly conducive to doing business, resulting in steady job creation.

2. Create Special Economic Zones

The strategy of leveraging special economic zones (SEZs) offers several benefits for economies struggling to create high-quality domestic jobs. Businesses within these zones directly employ talented people who may have otherwise migrated elsewhere, keeping more of their income within the country. They also facilitate useful skill and technology transfers, further improving domestic human capital and stoking future entrepreneurship and innovation. These benefits, in turn, lay the groundwork for consistent domestic job creation throughout an entire economy.

In the Philippines, SEZs have been a key component in the job creation strategy for several decades, often being partly credited with the country’s imminent rise to upper-middle income status. Other Asian economies tell similar stories, with China and South Korea’s SEZs being instrumental in their decades-long rise to economic superpower status.

3. Pivot Human Resources to Address Emerging Needs

Aligning the workforce with emerging industries like artificial intelligence and sustainable manufacturing is going to be crucial for middle-income countries. As it is, middle-income countries face a serious capabilities gap when it comes to these areas. Policymakers need to act early to meet this challenge so that the jobs in these sectors are produced domestically.

But as important as creating jobs in those areas is, policies should not be hyperfocused on them. Education policy-setters must help both young learners and the present workforce pivot towards a culture of continuous learning to ensure their relevance in a rapidly evolving business landscape.

4. Explore More Public-Private Partnerships

Throughout Asia, Public-Private Partnerships (PPPs) have shown themselves to be instrumental in funding and implementing large-scale projects, leading to job creation. To avoid job stagnation, policymakers in middle-income countries should actively seek opportunities for PPPs in infrastructure development, social services, and other key sectors. This approach leverages the combined strengths of government and private enterprises and avoids the pitfalls associated with pure market and command economies.

5. Invest in Local Innovators 

Lastly, policymakers in middle-income countries must not lose sight of domestic innovation capacity. Middle-income countries often fall into the so-called “middle-income trap,” a situation where job creation and wages become stagnant because of the lack of domestic innovation. Many economists blame the trap on an overreliance on foreign investments and rapid de-industrialization in pursuit of short-term market efficiency. 

With that in mind, policymakers should proactively avoid stagnancy in vital domestic sectors. One way this has been done successfully is by encouraging grassroots entrepreneurship, particularly in strategic areas like heavy industry and emerging sectors like technology. Simplifying bureaucracies and funding requirements for these areas makes it easier for high-value jobs to be created in these areas, hopefully raising domestic innovation and avoiding the middle-income trap.

Strengthening Middle-Income Economies Through Job Creation

Through targeted policymaking, struggling middle-income countries can guarantee sufficient jobs for their citizens and position themselves for sustained growth in both their economies and their collective human resources. A comprehensive approach that involves all sectors of society can make this vision a reality. With a wiser, historically based approach that looks at what worked and what failed elsewhere, middle-income countries can eventually build a domestic capacity for job creation that is no longer completely reliant on external factors.

This sponsored post is verified by Sheila Viesca. For guest posting, reach out to TalkShop.

Also read: 5 Ways to Create More Jobs in Middle-Income Countries

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