This paper provides a summary of the
empirical and policy-related literature on the multifaceted
relationships between gender inequalities and foreign direct
investment (FDI). The literature on gender and FDI is evaluated with
reference to the broader literature on FDI and economic development,
new research directions are identified, and the policy implications
of managing FDI for development and gender equity are
discussed.
The empirical literature on the relationship
between FDI and growth and development is surprisingly mixed. The
paper reviews the research on the impact of FDI on investment,
productivity, trade, employment, wages and working conditions, and
finds few of the straightforward conclusions that the popularity of
FDI as a tool for development would seem to indicate. However,
despite a number of open questions and seeming contradictions, two
consistent issues repeatedly arise. First, very little is understood
about the dynamic impact of FDI. Even where positive correlations
between FDI and investment, employment or wages appear, there is
little analysis of whether and how the impact is sustained – to what
extent (and how) FDI impacts the process and trajectory of
development. Second, the research in which there does seem to be an
emerging consensus is on the importance of the economic and policy
context for FDI in determining its eventual impact.
In terms of women and FDI, it is
clear that foreign investment in labour-intensive, largely
export-oriented industries has had a significant impact on women’s
work and development. While there has been a positive relationship
between women’s employment and FDI in semi-industrialized countries,
there is mounting evidence that women either lose jobs to more
highly qualified men as industries upgrade, or get pushed down the
production chain into subcontracted work as competition forces firms
to continually lower costs. There is likely to be some short-term
improvement in women’s incomes as FDI expands, but the longer-term
trajectory of women’s wages is less promising. In terms of
gender-based wage inequality, the research on FDI is consistent with
other findings that trade does not systematically narrow the gender
wage gap. The nature of gender segmentation and industrial
distribution – where women are concentrated in highly competitive
traded sectors – and the high mobility of transnational capital are
instrumental in determining the gender wage gap. While women’s wages
may undergo an absolute boost from foreign investment, it seems less
likely that this will result in a closing of the gender wage
gap.
More research is needed in the
following areas:
FDI in the services sector, as much of the
extant research is focused on the manufacturing sector, and services
make up an increasingly significant part of exports for developing
countries the relationship between
foreign investment and gender equity, including an expansion of the
ways that we measure gender equity beyond wages and
education a closer assessment of how
the changing structure of international production and the rise in
subcontracting affect the statistics on women’s employment and our
assessments of them gaining a better
understanding of the gender–FDI relationship over time, in terms of
both the impact of FDI on gender, and the impact of gender on
FDI lastly, identifying where and why
foreign investment has worked well for women and development, with
particular emphasis on the role of public policy.
Taking up the issue of public policy and FDI,
the last section of the paper will review policies for managing
labour-intensive, export-oriented FDI, the sector in which companies
are most likely to be significant employers of women. The paper
argues that there are ways to structure FDI policies from a
gender-aware perspective, and that it is crucial to incorporate this
perspective in struggles to link this type of FDI more closely with
development. The last section introduces a framework for evaluating
FDI policies, categorizing them according to their various targets:
attracting FDI, contributing to economic growth or promoting gender
equity. These policy targets can and do overlap, and three
particular types are evaluated: those that link FDI (1) with growth,
(2) with growth and equity, and (3) with equity. Among the FDI and
growth target policies, the paper evaluates those that give
advantages to domestically owned firms. For those that might link
FDI with growth and equity, we evaluate performance requirements,
incentives, labour standards and the regulation of physical capital
mobility. In terms of equity itself, however, it is argued that the
most important intervention open to governments is to enhance the
productive capacities of women and girls, as well as to expand the
social supports available to them and their families as they enter
the labour market. Such policies will not only make women more
productive workers, and thus better able to draw on the potential
advantages of FDI, but will simultaneously redress the structural
sources of gender inequities.
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