Investing in equality: A case for motivating gender empowerment through foreign direct investment

Policy makers often strategically leverage foreign direct investment (FDI) to boost economic productivity and bring technological innovations into domestic economies. Expanding the theory of these positive economic spillovers to include socio-cultural factors in FDI spillovers, this paper presents FDI as a transmission mechanism for gender equality. Using a novel dataset covering 91 countries and a time span ranging from 1972 to 2013, this paper concludes that that FDI has no statistically significant impact on gender wage gaps. Despite increasing firm-level initiatives on gender equity, empirically, aggregate FDI currently fails to overcome domestic cultural barriers to influence gains in gender equity. This conclusion contributes to growing literature on trade openness and the gender wage gap by presenting FDI as a potential public policy instrument to support countries advance gender parity in the domestic society and the larger economic arena.