Unleashing the horizons of labor quality, digitalization on upgradation of industrial structure in Asian economies

by Zujie Zhang, Ghulam Rasool Madni, Jaweriya Naeem

A country’s industrial structure plays a pivotal role in determining its competitiveness, growth, and sustainability. Recently, many Asian countries have experienced significant economic upgradation and transformation and have emerged as major players in global trade. It is crucial to understand the factors contributing in upgradation of industrial structure of Asian economies for their continuous progress and it is little focused in literature. This study explores the effect of labor quality and digitalization on the upgradation of the industrial structure in 32 Asian countries covering the time period from 2010–2021. Multiple econometric techniques are applied for a comprehensive analysis of data, and the findings show that high-quality labor has a positive contribution to upgrading the industrial structure. Moreover, digitalization upgrades the industrial structure by improving connectivity, fostering collaboration, and enhancing productivity. Based on the findings of this study, Asian countries should prioritize investments in education and skill development to enhance human capital quality. Additionally, they should promote policies that facilitate digitalization, including investments in digital infrastructure, the development of digital skills, and the creation of a supportive regulatory environment. Thus, Asian countries can accelerate the upgradation of their industrial structure, leading to sustainable economic growth, increased competitiveness, and improved living standards.