Why Do Foreign Investors' Attitudes Toward Women Matter

22:08, 30/09/2021 Why Do Foreign Investors’ Attitudes toward Women Matter?
Published on Private Sector Development Blog (/psd)
Why Do Foreign Investors’ Attitudes

toward Women Matter?
HEBA SHAMS (/TEAM/HEBA-SHAMS) & KUNXIANG DIAO (/TEAM/KUNXIANG-DIAO) | JUNE 21, 2018
This page in: English
    
(mailto:?
body=https%3A%2F%2Fblogs.worldbank.org%2Fpsd%2Fwhy-
Gender equality is one of the sustainable development goals (SDGs) that calls for
do-
ensuring women’s full participation in political, economic and public life as a
foreign-
target. Gender inequality is still a key development issue. The World Economic
investors-
Forum’s Gender Gap Report 2017 (https://www.weforum.org/reports/the-global-
attitudes-
gender-gap-report-2017) found a gender gap of 42% when it came to labor force
toward-
participation and earned income. Unrealized Potential
women-
(https://openknowledge.worldbank.org/handle/10986/29865), a May 2018
matter%3Fcid%3DSHR_BlogSiteEmail_EN_EXT&subject=Why%20Do%20Foreign%20In
publication of the World Bank Group, puts a staggering figure to the cost of this
inequality in earnings - $160.2 trillion globally, or $23,620 per capita.
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https://blogs.worldbank.org/psd/why-do-foreign-investors-attitudes-toward-women-matter 1/6
In order to promote women’s participation in the economy, maximizing private

finance has a key role to play. This means increasing the volume of private finance
available for development and increasing the impact of private finance in
achieving the Sustainable Development Goals (SDGs).
One of the most coveted global private financial flows is foreign direct investment
(FDI). It is stable and it is productive. In 2016, total FDI flows to developing
countries reached $646 billion
(http://unctad.org/en/pages/PublicationWebflyer.aspx?publicationid=1782), out of
a total of $1.8 trillion. This dwarfs the $145 billion in Official Development
Assistance flows for the same year according to the OECD. It is therefore not
surprising that researchers and policymakers are investigating the impact of FDI
on a range of development outcomes and determinants, including on women’s
economic empowerment
(http://documents.worldbank.org/curated/en/664491467994693599/pdf/WPS7437.p
What can FDI contribute towards economic equality for women?
Two researchers, Heiwai Tang & Yifan Zhang, published a paper

(https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2917193) in 2017
examining the impact of multinational corporations on women's employment in
the manufacturing sector in China. They found that FDI has a positive impact on
women’s economic empowerment when it comes from more gender equal
countries. Specifically, their research showed that foreign invested firms from
countries with more equal culture, as measured by their score on the UNDP
Gender Inequality Index (GII), (http://hdr.undp.org/en/composite/GII) tend to hire
more women and have more women managers. They also found that local firms
operating in cities or sectors that have a high concentration of foreign affiliates
from countries with higher gender equality tend to hire more females. This
suggests cultural spillover across firms. They concluded that the trends result
directly from spontaneous cultural transfer between the home country and the
host country mediated through FDI.
It is well known that outward investment from developing countries is gaining

momentum and changing the landscape of FDI in developing countries, especially
in smaller ones. Given Tang and Zhang’s research, we wondered: How will this
newer wave of FDI, potentially from countries with less equal gender
cultures, x
This siteimpact women?
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We used Tang and Zhang’s methodology and applied it to the developed and
developing countries with the highest levels of outward an inward FDI[1]. Here is
what we found:
Developed countries with the most outward FDI tend to be among the most
gender equal countries in the world and are significantly more gender equal
than developing countries who are receiving the bulk of these flows.
Developing countries with the most outward FDI are on average significantly
less gender equal than the traditional developed FDI source countries. They
are also quite dispersed on the gender equality spectrum. Some are a lot less
equal than others.
x
If more FDI is originating from more unequal countries, can the

spontaneous positive cultural spillovers of gender norms continue to give
FDI a positive gender equality story?
A lot more research is needed, yet it seems that with the changes in the
landscape of FDI, relying on positive externalities to move the needle on gender
norms will not be sufficient. This is a case where private finance needs a nudge to
achieve the SDG on Gender Economic Equality. This nudge may come from
enlightened host country policies, but may equally come from the actions of
different civil society players and from consumers voting with their purse. Not
taking active and targeted action to maximize the impact of FDI for women will be
a waste of a $646 billion opportunity.
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[1] Specifically, to optimize
we looked at thefunctionality
A) top 10and give you the countries
developing best possibleinexperience.
terms ofIf you
outwardmore FDI, B)cookies,
about top 10click
developed countries in terms of outward FDI, and C) the
here. (https://www.worldbank.org/en/about/legal/privacy-notice)
top 10 developing countries in terms of inward FDI (excluding Singapore, China

and Hong Kong SAR)
FINANCIAL INCLUSION (/SEARCH?F[0]=TOPIC:294&F[1]=LANGUAGE:EN), FINANCIAL SECTOR (/SEARCH?

F[0]=TOPIC:293&F[1]=LANGUAGE:EN), GENDER (/SEARCH?F[0]=TOPIC:295&F[1]=LANGUAGE:EN), MACROECONOMICS
AND FISCAL MANAGEMENT (/SEARCH?F[0]=TOPIC:302&F[1]=LANGUAGE:EN), COMPETITIVENESS (/SEARCH?
F[0]=TOPIC:283&F[1]=LANGUAGE:EN)
Authors
(/team/heba-shams) (/team/heba-shams)
Heba Shams (/team/heba-shams)
Lead Private Sector Specialist
MORE BLOGS BY HEBA (/TEAM/HEBA-SHAMS)
(/team/kunxiang-diao) (/team/kunxiang-diao)
Kunxiang Diao (/team/kunxiang-diao)
Economist
MORE BLOGS BY KUNXIANG (/TEAM/KUNXIANG-DIAO)
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22:08, 30/09/2021 Why Do Foreign Investors’ Attitudes toward Women Matter?

Published on Private Sector Development Blog (/psd)

Why Do Foreign Investors’ Attitudes

In order to promote women’s participation in the economy, maximizing private

What can FDI contribute towards economic equality for women?

Two researchers, Heiwai Tang & Yifan Zhang, published a paper

It is well known that outward investment from developing countries is gaining

If more FDI is originating from more unequal countries, can the

top 10 developing countries in terms of inward FDI (excluding Singapore, China

FINANCIAL INCLUSION (/SEARCH?F[0]=TOPIC:294&F[1]=LANGUAGE:EN), FINANCIAL SECTOR (/SEARCH?

MORE BLOGS BY HEBA (/TEAM/HEBA-SHAMS)

MORE BLOGS BY KUNXIANG (/TEAM/KUNXIANG-DIAO)

Join the Conversation

Legal (http://www.worldbank.org/legalinfo) Privacy Notice (https://www.worldbank.org/en/about/legal/privacy-

REPORT FRAUD OR CORRUPTION (HTTP://WWW.WORLDBANK.ORG/FRAUDANDCORRUPTION)

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