This study explores how technological upgrading and innovation influence firm employment dynamics in Vietnam, a rapidly transforming emerging economy. Using a unique firm-level dataset and econometric analysis, we distinguish the employment effects of product, process, and R&D-driven innovation from broader technological adoption, including ICT and capital investment. Our findings challenge the view that automation displaces jobs – firms investing in R&D and patenting expand employment, while technology-intensive capital goods spur job creation, particularly in labour-intensive industries. Effects vary by firm size and sector, with SMEs and manufacturing firms benefiting most. These insights extend beyond Vietnam, offering evidence that technological advancement can align industrial transformation with social equity in emerging economies. By contributing to global debates on the future of work, our study informs policies that balance productivity gains with labour market stability, providing a roadmap for inclusive and sustainable economic development in the digital.
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Phuong et al. (2025) studied this question.