Embracing Technological Advancement: Assessing the Impact of Innovation on Sectorial Employment in Tanzania

Seth Kenedi Mbwambo; Rehema Reuben Mathew; Valence Chinaboine Vedasto

doi:10.37284/eajbe.7.1.2241

Seth Kenedi Mbwambo Moshi Co-operative University
Rehema Reuben Mathew Moshi Co-operative University
Valence Chinaboine Vedasto Institute of Accountancy Arusha

DOI: https://doi.org/10.37284/eajbe.7.1.2241

Keywords: Technology, Innovation, Employment, Economic Sectors, Tanzania

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Abstract

Technological innovation is one of the most rapidly advancing and dynamic sector today. It drives growth across all sectors of the economy. However, this rapid growth presents both opportunities and challenges. Taking innovation into account, this study aims to assess the impact of technological innovation on three sectors which are agriculture, industrial, and service sectors. The study employed the autoregressive distributed lag model (ARDL), with data from 2000 to 2022 obtained from the World Bank (WB) and the World Intellectual Property Organization (WIPO). Three ARDL models were used to estimate employment in the agriculture sector, employment in the industrial sector and employment in the service sector with inflation (CPI) and interest rate (INT) as the control variables. The ADF (Augmented Dickey-Fuller) test, PP(Philip-Perron) test, Serial Correlation LM test, BG Heteroscedasticity, and Jarque Bera Normality test were utilized to ensure robust estimates of the models. The findings revealed that innovation has a significant positive influence on employment in the agriculture sector and service sector whereas the industrial sector is negatively influenced by innovation. Nevertheless, inflation has a significant positive effect on employment in the agriculture and service sectors but negatively affects employment in the industrial sector, where a lag in interest rate influence negatively employment in the agricultural sector. Relying on these findings, the study recommends an increase in expenditure on research and development, formulation of policies that will mainstream innovation in all sectors of the economy, and investing more in education and skills development

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