Cross-country evidence

Is foreign investment associated with more equal employment policies and practices for women? The discussion in the conceptual framework offered several theoretical reasons for the positive transmission of gender equality from multinational to domestic firms, under the key assumption that MNEs maintain high-quality labour policies regarding women. Unfortunately, some of the empirical data presented suggest the opposite—that MNEs actually display worse gender disparities than domestic firms. Therefore, the expectations for a positive transmission to the domestic economy are reduced.

6.1.1. Policy spillovers

With information from the Women, Business, and Law database on the prevalence of equal rights in the workplace and equal rights in remuneration across countries and over time, alongside data from the Enterprise Surveys aggregated to the country level on the incidence of foreign ownership within a country over time, this section presents several simple correlations to examine the empirical evidence.

Unfortunately, the cross-country analysis does not present a strong statistical relationship for spillovers of foreign investment to local policies on equal rights for women. Accounting for regional variation, time trends, and controls for average firm size, average firm age and the likelihood that firms are part of a larger holding company, the association is not statistically significant, although there is a positive association between the average percentage of foreign ownership at the country level and overall rights for women. The positive association is stronger when country-specific, idiosyncratic characteristics are co-considered in the analysis. Breaking the analysis down into workplace rights versus pay rights offers similar conclusions (table 2). Together, these results indicate that policy should take into account the potentially differential outcomes of foreign investment for men and women.

Source: UNCTAD.

Note: Robust standard errors in parentheses. ***p<0.01, **p<0.05, *p<0.1. Controls include average firm size, average firm age and the likelihood that firms are part of a larger holding company. Columns 2 and 4 present results controlling for country fixed effects.

Table 2. Impact of the presence multinational enterprises on workplace and equal pay rights enjoyed by women

  (1) (2) (3) (4)

Variables Workplace Workplace Pay Pay

Foreign presence (MNEs) (per cent)

-0.120 (0.273)

0.584 (0.602)

0.188 (0.312)

0.510 (0.436)

Observations 259 259 259 259

R-squared 0.211 0.873 0.197 0.929

Region fixed effect Yes No Yes No

Year fixed effect Yes Yes Yes Yes

Country fixed effect No Yes No Yes

Controls Yes Yes Yes Yes

Spillovers from multinational enterprise gender policies and 41 practices to the host economy

6.1.2. Practice spillovers

When considering gender-related labour market practices from the Enterprise Surveys, the data show a positive and significant relationship between a country’s foreign ownership share—the share of firms in the country with some foreign ownership—and the female workforce composition for both administrative and production workers. These results hold even when accounting for industry differences and using firm-level data (columns (3) and (4) of tables 3 and 4).

Source: UNCTAD.

Note: Robust standard errors in parentheses. ***p<0.01, **p<0.05, *p<0.1. Column (1) is at the country level, column (2) at the country industry level, and columns (3) and (4) at the firm level.

Controls include average firm size, average firm age and the likelihood that firms are part of a larger holding company.

Table 3. Impact of the presence of multinational enterprises on the composition of the female workforce

Per cent total women (1) (2) (3) (4)

Foreign presence (MNEs) (per cent) -0.004 (0.077)

0.045***

(0.014)

0.013***

(0.003)

0.013***

(0.003)

Observations 233 5,089 95,026 88,338

R-squared 0.582 0.4852 0.196 0.361

Region fixed effect Yes Yes No No

Year fixed effect Yes Yes Yes Yes

Country fixed effect No No Yes Yes

Industry fixed effect No Yes No Yes

Controls Yes Yes Yes Yes

Source: UNCTAD.

Note: Robust standard errors in parentheses. ***p<0.01, **p<0.05, *p<0.1. Column (1) is at the country level, column (2) at the country-industry level, and columns (3) and (4) are at the firm level. Controls include average firm size, average firm age and the likelihood that firms are part of a larger holding company.

Taken together, these robust statistical exercises offer fairly resounding confirmation that MNEs may help to enhance labour market outcomes for women across a wide range of countries and over a long time horizon.

Consequently, despite the fact that in the previous section many multinationals did not present as having strongly progressive labour market practices, in the aggregate foreign investment seems to be a strong correlate of female employment for both production and nonproduction workers.

In fact, the exercises from the various background papers for this report also support this notion. In the Costa Rican IT sector, domestic firms in the same industry as foreign firms also report higher female employment shares when compared to similar domestic firms in industries with lower foreign ownership representation (Monge-Gonzalez et al., forthcoming). In Table 4. Impact of the presence of multinational enterprises on the share of female production and administrative workers

  Per cent women production Per cent women administrative

Per cent

Observations 199 3,211 55,118 49,723 200 3,172 52,463 47,112

R-squared 0.488 0.4769 0.191 0.377 0.919 0.2256 0.234 0.2368

Region fixed

effect Yes Yes No No Yes Yes No No

Year fixed

effect Yes Yes Yes Yes Yes Yes Yes Yes

Country fixed

effect No No Yes Yes No No Yes Yes

Industry

fixed effect No Yes No Yes No Yes No Yes

Controls Yes Yes Yes Yes Yes Yes Yes Yes

Spillovers from multinational enterprise gender policies and 43 practices to the host economy

Bangladesh, domestic firms that supply foreign-owned firms also report hiring more female administrative workers (Fernandez and Kee, 2020). In Viet Nam, areas of the country with stronger foreign investment report higher female employment (Pham et al. 2020).¹⁴ In India, increased FDI is associated with higher employment of women, particularly unskilled women (Sharma, 2020). It is also worth mentioning that, in addition to the positive impacts of foreign investment on female employment, research has shown important positive social improvements for women with the expansion of foreign investment (e.g. in terms of reductions in crime and delayed marriage and childbearing).