Mediating variables in the path of human capital and digitalization.

Abstract

The industrial structure of a country has an essential role in determining its competitiveness, growth, and sustainability. Many countries are experiencing significant industrial upgradation and transformation and emerged as gigantic players in global trade. It is vital to understand the factors contributing in the upgradation and transformation of the industrial structure of Pakistan as well as other Asian countries because it is hardly intensive on in the literature. Study incorporate 30 Asian countries from the time period 1995 to 2022.This study explores the potential factors like labor quality and digitalization on the upgradation and transformation of industrial structure. Multiple econometric techniques like regression and  Hausman test are applied for a comprehensive analysis of data. It is hypothesized that mediating variables has a positive contribution in upgradation and transformation of the industrial structure. Moreover, digitalization upgrades and transforms the industrial structure by improving connectivity through different mediating variables. Study include three mediating variables 1) institutional quality 2) unemployment 3) Research and development. Based on the study findings, these countries should prioritize investments in education and skills development to enhance human capital quality. Findings also suggest policies that helpful in the development of digital infrastructure and the creation of job opportunities. In this way, these countries can accelerate the upgradation of their industrial structure, leading to sustainable economic growth, increased competitiveness, and improved living standards. In conclusion, relationship of labor quality, digitalization, and industrial structure provides valuable visions into enhancing productivity, promoting economic growth, managing employment dynamics, fostering innovation, and driving sustainable development. Institutional quality and research and development has a positive impact on digitalization whereas unemployment rise due to digitalization. Such research is essential for policymakers, businesses, and individuals to navigate the evolving industrial landscape effectively.