Examining patterns of total jobs in exports highlighted the importance of domestic supplying sectors in creating jobs and different patterns of sectoral specialization in high-income versus emerging countries. In manufacturing, employment in exports is higher in supplying sectors (e.g., services or agriculture) than in the exporting sectors themselves. Emerging countries added more jobs in manufacturing exports, while high-income countries created more jobs linked to business services exports. The latter made up for falling jobs in manufacturing exports (e.g., the US and Western Europe). The findings also highlight the growing number of jobs in business services exports across all countries, reflecting the structural transformation away from manufacturing and towards services in the sample of HMICs. A few emerging countries showed higher growth of manufacturing-linked jobs than business services-linked jobs in exports, including Türkiye, Mexico, Chile, Czechia, Indonesia, the Slovak Republic, and China.

Adding the occupational dimension to sectoral specialization patterns allowed us to assess different upgrading trajectories at the level of activities. Services activities in exports, such as support, engineering, and managerial services, are becoming increasingly important as countries get richer, while production activities continue to dominate the exports of lower-income countries. The analysis highlighted the fundamental shift in manufacturing activities taking place between 2000 and 2018, offering more opportunities for structural change in lower-income countries. The analysis also suggested that GVCintensive countries such as Vietnam, Mexico, Poland, and Ethiopia tend to have larger shares of production activities in exports compared to resource-intensive countries, like Indonesia, Kyrgyz Republic, Brazil, and Ghana. Even among countries that export similar products, the activities that workers perform have different implications for growth. For example, in Cambodia, textile workers have been stuck in low value-added production activities for two decades. On the other hand, in Türkiye, the labor composition of textile exports is more diverse and includes sophisticated managerial and engineering services.

Tailored policies are essential to harness the job creation benefits from trade. While trade policies are a fundamental instrument, long-term success also relies on minimizing worker adjustment costs influenced by macroeconomic conditions, labor markets, and infrastructure. Education plays a crucial role in enabling economies to seize trade opportunities by shaping skill supply and comparative advantage. Countries with a highly skilled workforce are better poised to engage in knowledge-intensive trade activities. Labor market flexibility, characterized by fewer regulations, supports worker mobility and correlates with higher export-driven employment. Lowering tariffs and non-tariff measures enlarges market size, especially in non-commodity exporting developing countries. Foreign direct investment in export sectors can boost labor demand and productivity, especially in countries with limited resources. Strong institutions, effective competition policies, and infrastructure are vital for generating high-quality jobs. Considering these factors can help policy makers maximize the job creation potential from trade while minimizing adjustment costs for workers.

33