Labour Mobility and Innovation in Africa

Abstract We investigate whether short-term mobility differentially affects innovation in product or process through the help of a theoretical model, and carry out an empirical analysis with a focus on African countries using firm-level data from the World Bank Enterprise Survey. We find that labour mobility positively affects innovation, especially for products and services, supporting its use as an effective mechanism to diffuse productive knowledge and foster innovation. We also find that short-term mobility benefits low-technology sectors the most, and that mobility from high-income countries may be an effective way of leveraging innovation in high-technology sectors in Africa. The results are robust to a variety of approaches controlling for endogeneity, and support the adoption of labour mobility nationally and across Africa to encourage labour mobility to promote domestic innovation and productivity.