World Bank East Asia and Pacific Economic Update : Jobs and Technology - Overview (English)

Table of Contents

• Summary 4
• Figure O1. The region continues to grow faster than the rest of the world but slower than before the pandemic 4
• Figure O2. Geopolitical risks have increased and Red Sea disruptions to shipping and trade continue 5
• Figure O3. China’s growth has benefitted developing economies, but the benefits have become smaller as its growth slows down and its exports grow faster than it imports 6
• Figure O4. The number of new trade-distorting measures continues to increase, both globally and in the EAP region 6
• Figure O5. EAP countries employ more people in routine manual occupations and fewer people in cognitive occupations than advanced countries 8
• Figure O6. Robot adoption has led to higher employment and earnings of more educated workers while increasing the informality rate of the low-skilled 9
• Figure O7. AI largely affects cognitive task-based occupations, while complementing some non-routine cognitive task-based occupations; the EAP workforce is less exposed to AI than advanced economies due to the higher share of manual jobs 10
• Figure O8. Hard and soft skills: the share of STEM graduates is relatively small in developing EAP; socio-emotional learning (SEL) can be fostered in schools 11
• Recent Developments and Outlook 1
• Figure 1. The region continues to grow faster than the rest of the world but slower than before the pandemic 1
• Figure 2. While output per capita is well above pre-pandemic levels in most of the larger economies, it remains below those levels in many Pacific Island Countries and Myanmar 1
• Figure 3. The EAP countries were rapidly catching up with per-capita incomes in advanced countries but the process has slowed down 1
• Figure 4. Poverty rates are expected to decline further 1
• Figure 5. The EAP prosperity gap has been steadily declining 1
• Figure 6. Private consumption has sustained growth in the major countries, but its contribution has been declining in China and Thailand; services exports have helped boost growth in Malaysia, the Philippines, and Thailand, and public investment in Indone 1
• Figure 7. Even though consumption is supporting growth, consumer spending, imports and confidence remain subdued, especially in China 1
• Figure 8. Investment growth has been declining in most countries but has revived in Viet Nam 1
• Figure B1.1. Property market slump has weighed on residential investment growth, whereas manufacturing investment remains robust 1
• Figure B1.2. Capacity utilization has decreased in some sectors as profit margins decline and the share of loss-reporting firms increases 1
• Figure 9. The region’s exports are recovering only gradually as is tourism 1
• Figure 10. China’s exports rebounded from the slump in 2023 supported by an increasing share of exports to the rest of the region 1
• Figure 11. Fiscal policy is expansionary in China, Indonesia and Thailand, but not in Malaysia and the Philippines; monetary policy remains non-expansionary, but has started to ease 1
• Figure 12. Inflation remains contained in most of the region, but is still high in Lao PDR and Myanmar, and the US interest rates are expected to decline 1
• Figure 13. Capital outflows continue, and some countries face depreciation pressures 1
• Figure 14. China’s share in global trade has significantly increased, 1985-2023 1
• Figure 15. Within the EAP region, some countries’ exports are dominated by manufactured goods while other countries specialize in commodities 1
• Figure 16. Developing economies’ growth benefitted on average more from China’s increased demand for imports than it was hurt by China’s increased competition in export markets 1
• Figure 17. Public and private debt have increased compared to pre-pandemic levels; private debt remains high in China, Malaysia, Thailand and Viet Nam 1
• Figure B2.1. Increased household debt is negatively correlated with consumption growth; Increased government debt and high private debt are negatively correlated with private investment growth 1
• Figure 18. Interest payments on external debt have increased in 2023 in most countries, but falling interest rates may offer some respite 1
• Figure 19. Risks from Red Sea disruptions to shipping and trade continue 1
• Figure 20. Uncertainty in the United States has spiked and remains elevated 1
• Figure 21. Uncertainty appears to be synchronized across countries, likely driven by global factors 1
• Figure 22. Uncertainty in the EAP has seen recent spikes 1
• Figure 23. Impact of US uncertainty on EAP 1
• Figure 24. The number of new trade-distorting measures continues to increase, both globally and in the EAP region 1
• Figure 25. US and China decreased their reciprocal share of FDI in manufacturing and R&D. China increased its share of FDI to Mexico and Viet Nam 1
• Figure 26. Viet Nam and Mexico emerged as “connector” countries, especially in the manufacturing sector 1
• Figure 27. The increase in the share of Chinese (US) FDI outflows to a country is positively (negatively) correlated to increase in its share of US (China) imports. An increase in the share of Chinese (US) FDI outflows to a country is positively correlate 1
• Figure 28. Deep dive Viet Nam: the more firms were engaged in international exports in 2017, the higher the gain in sales, productivity and employment over 2017–2021 1
• Figure 29. Deep dive Viet Nam: event study analysis reveals that firms who were exporting to the US at any point between 2016 and 2021 had higher sales, employment, and productivity growth than the other exporters in 2018-2021, this coupled with a relativ 1
• Figure B4.1. GDP growth and contributions 1
• Figure B4.2. Measures of real output 1
• Figure B5.1. In Cambodia, non-performing loans are rising as private credit growth is declining 1
• Figure B5.2. Lao PDR’s banking sector is facing higher accrued interest payments, worsening asset quality, and increasing currency mismatches 1
• Technology and Jobs in EAP 1
• Figure 1. A larger share of the working age population is employed in EAP countries than in most other developing economies, but the share of the working age population in total population is falling in Mongolia, China, Thailand, and Viet Nam 1
• Figure 2. The young are struggling to find jobs, especially in countries like China and Indonesia, and older workers have lower labor force participation rates 1
• Figure 3. Labor force participation remains lower for women, though to a lesser extent in Cambodia and Viet Nam, and has improved little except in Malaysia, the Philippines, and Indonesia 1
• Figure 4. The educational levels of the workforce have risen but only a small fraction have tertiary education, except in Mongolia 1
• Figure 5. Employment has moved mostly from agriculture to low-earning sectors such as trade, accommodation and construction, and less to high-earning sectors 1
• Figure 6. Informal employment has declined in EAP more than in other regions, but is still high in Lao PDR, PNG, Timor-Leste, Myanmar and most Pacific Island Countries 1
• Figure 7. The decrease in informal employment in agriculture was partly offset by increase in services 1
• Figure 8. Wage growth has been robust in EAP countries and faster than labor productivity growth 1
• Figure 9. Women still earn less than men but the gender wage gap is declining, except in Indonesia 1
• Figure 10. Wages rose faster for younger workers 1
• Figure 11. The wage premia on secondary and tertiary education are significant but have declined, except in Indonesia 1
• Figure 12. The highest wages are earned in skilled services, followed by manufacturing, low-skilled services, and agriculture 1
• Figure 13. Wages have been converging across sectors and occupations, except that ICT and technical professionals have seen their already high wages increase even faster 1
• Figure 14. An integrated view of new technologies and affected occupations 1
• Figure 15. EAP countries employ more people in routine manual task occupations and less people in cognitive task occupations than advanced countries 1
• Figure B1.1. Jobs in EAP are more physical task-based than in advanced economies and non-routine cognitive jobs are relatively scarce 1
• Figure 16. Robot adoption has increased not only in automotive and computer and electronics sectors but also in others such as rubber and plastics 1
• Figure B2.1. Robot adoption is positively correlated with wages, industrial structure, and aging. 1
• Figure 17. Among high-adoption industries in EAP, robot penetration is positively correlated with overall employment growth 1
• Figure 18. Robot adoption has rapidly increased in Viet Nam after 2016; driven by two high-productivity industries: (i) electrical equipment and (ii) computers & electronics 1
• Figure 19. Robot adoption is concentrated in industrial zones, where there is a dominant presence of foreign-owned enterprises 1
• Figure 20. Districts with greater robot adoption have seen increases in higher-educated employment and their earnings 1
• Figure 21. The displacement effect of robotization can be observed on low and medium-skilled workers performing routine physical tasks, who are likely to be absorbed into the informal sector 1
• Figure 22. Male and female workers in districts with greater robot adoption experience similar employment and wage gains 1
• Figure B3.1. Meta-analysis documenting estimated employment effect of robotization 1
• Figure 23. AI largely affects cognitive tasks, but some non-routine cognitive tasks can be complemented by AI; the EAP workforce is less exposed to AI due to its high concentration in physical tasks 1
• Figure B4.1. Jobs involving routine and non-routine cognitive tasks may be substituted by AI while some jobs involving non-routine cognitive tasks are likely to be complemented by AI 1
• Figure 24. EAP countries are relatively less exposed to labor displacing effects of AI than advanced economies, and also have less jobs that are complementary to AI 1
• Figure 25. In EAP, women, the higher-educated, and workers in commerce sectors are more likely to be engaged in AI-exposed occupations 1
• Figure 26. Higher exposure to AI is associated with lower earnings in most EAP countries, while AI exposure is not correlated with employment growth 1
• Figure 27. The share of employment in digitally intensive occupations is lower in EAP countries than in advanced economies and in other EMDEs with similar incomes 1
• Figure B7.1. Digital-intensity of jobs is highly correlated with the share of workers who use digital technology (Viet Nam, 2021) 1
• Figure 28. Digitally intensive occupations see higher wage premia in EAP and higher employment growth in some countries 1
• Figure 29. Working with digital technologies yields a higher wage premium for the more educated 1
• Figure 30. Women working with digital technologies tend to have higher earnings and employment growth than men 1
• Figure B8.1. An increasing share of workers, both formal and informal, male and female, use digital technologies 1
• Figure B8.2. Digital workers in both the formal and informal sector enjoy a wage premium 1
• Figure B8.3. Most workers in the informal sector do not have insurance or pensions 1
• Figure 31. The size of the digital platform economy has been increasing rapidly and uniformly in EAP countries 1
• Figure 32. The rapid diffusion of digital platforms in Philippines and Viet Nam, especially in retail and logistics industries, can be observed from website traffic 1
• Figure 33. Platform diffusion has positive effects on firm productivity and value added, but contrasting effects on employment in the Philippines and Viet Nam 1
• Figure 34. Within the specific service sectors where digital platforms operate in Viet Nam, platforms generate both business-creation and competition effects 1
• Figure 35. Aging is associated with greater robot adoption across countries 1
• Figure B9.1. Platform entry has a positive and durable earnings effect on motorbike drivers thanks to the technology-driven productivity gain; but only a transient boost to earnings of car drivers possibly as a result of competition effect 1
• Figure 36. Older workers are more exposed to automation and less engaged in digital occupations relative to younger workers in EAP 1
• Figure 37. Older workers in EAP are less engaged in digital occupations and less equipped with digital devices than younger workers 1
• Figure 38. Older workers in Viet Nam benefit less from robot adoption in terms of employment gain and labor productivity relative to younger workers 1
• Figure 39. Socio-emotional skill can be developed in schools 1
• Figure 40. Supply of STEM graduates is limited in EAP 1
• Figure 41. The supply of engineers in the US is positively correlated with long-term technology adoption and innovation including in the digital sector 1
• Figure 42. Barriers to labor mobility can trap generations in low-productivity employment (share of workers employed in Agriculture by birth cohort, 1999–2019) 1
• Figure 43. Higher taxation of capital relative to labor is associated with lower robot adoption 1
• Figure 44. Gig workers are willing to pay for social insurance 1
• Appendix 1
• Figure A1. US and China decreased their reciprocal shares of imports and exports. China’s share of exports to Mexico, Viet Nam, Thailand and Malaysia increased, and so did the share of imports of the US from those countries 1
• Figure A2. US and China decreased their reciprocal share of FDI in manufacturing and R&D. China increased its share of FDI to Mexico and Viet Nam. 1
• Figure A3. Viet Nam and Mexico emerged as “connector” countries, especially in the manufacturing sector 1
• Figure A4. A surprising asymmetry: an increase in the share of Chinese (US) FDI outflows to a country is positively (weakly negatively) correlated to increase in its share of US (China) imports. Less surprisingly, an increase in the share of Chinese (US) 1
• Figure A5. EAP country-specific task intensity and AI exposure 1
• Figure A6.A. Change in robot adoption and worker wage 1
• Figure A6.B. Change in robot adoption and worker wage 1
• Recent Developments and Outlook 1
• Box 1. Investment in China 1
• Box 2. The effects of higher debt in consumption and investment 1
• Box 3. Preferential Trade Agreements: A Shield against Industrial Policy? 1
• Box 4. Economic recovery and outlook in the Pacific Island Countries, 1
• Box 5. Financial sector policy in a post-forbearance landscape 1
• Technology and Jobs in EAP 1
• Box 1. Classifying jobs by task content 1
• Box 2. Empirical evidence on the determinants of robot adoption 1
• Box 3. A literature on employment effects of industrial robots across the world 1
• Box 4. Exposure to AI and complementarity 1
• Box 5. The creation of new digital jobs in China 1
• Box 6. The literature on employment and welfare impacts of digital connectivity 1
• Box 7. Measuring digital intensity of occupations 1
• Box 8. Digital jobs, informality, and female labor force participation in Indonesia 1
• Box 9. Income effect of ride-sharing platforms 1
• Box 10. Policy responses to the emergence of AI in the Philippines 1
• Box 11. Fostering socio-emotional skills of children 1
• Box 12. Building advanced technical skills to harness digital technologies 1
• Box 13. Using Digital Technologies to improve productivity of self-employed smallholder farmers 1
• Box 14. Innovative approaches to foster social insurance for gig and self-employed workers 1
• Abstract 3
• Overview 4
• Recent Developments and Outlook 1
• Technology and Jobs in EAP 1
• Appendix 1
• References 1