How Foreign Direct Investments Affect Gender Inequality: Evidence From Lower-Middle-Income Countries

Ho Tung Thanh (), Pham Tuan Nhat (), Truong Phuc Huu () and Duong Khoa Dang ()
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Ho Tung Thanh: Faculty of Finance and Banking, Ton Duc Thang University, No. 19 Nguyen Huu Tho Street, Tan Hung Ward, Ho Chi Minh City, Vietnam
Pham Tuan Nhat: Innovation and Sustainability Research Group, Faculty of Finance and Banking, Ton Duc Thang University, No. 19 Nguyen Huu Tho Street, Tan Hung Ward, Ho Chi Minh City, Vietnam
Truong Phuc Huu: School of Finance and International Business, Saxion University of Applied Sciences, Deventer, Netherlands
Duong Khoa Dang: Innovation and Sustainability Research Group, Faculty of Finance and Banking, Ton Duc Thang University, No. 19 Nguyen Huu Tho Street, Tan Hung Ward, Ho Chi Minh City, Vietnam

Economics - The Open-Access, Open-Assessment Journal, 2025, vol. 19, issue 1, 17

Abstract: This study offers novel empirical evidence on the nonlinear dynamics between foreign direct investment and gender inequality in lower-middle-income countries. Employing a rigorous empirical strategy using the system generalized method of moments to address potential endogeneity concerns, we examine an unbalanced panel of 966 annual observations across 47 lower-middle-income countries from 1990 to 2021. The results demonstrate that FDI inflows significantly alleviate gender inequality, with a 1% increase in FDI corresponding to a 0.15% reduction in the gender inequality index. However, the analysis also uncovers a U-shaped relationship, with a turning point at approximately 10% of GDP, suggesting that while moderate FDI promotes gender equity, excessive FDI penetration may exacerbate disparities through labor market segmentation and unequal access to FDI-induced opportunities. These findings reinforce human capital theory and contribute to the broader discourse on the socio-economic implications that promote sustainable gender development in lower-middle-income countries.

Keywords: foreign direct investment; gender inequality; human capital theory; SGMM; lower-middle-income countries (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:bpj:econoa:v:19:y:2025:i:1:p:17:n:1003

DOI: 10.1515/econ-2025-0170

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