Foreign Direct Investment and Gender Inequalities in Labour Force Participation in African Countries

Abstract: Foreign Direct Investments (FDI) has been described as a mechanism to promote employment. Recent research suggests that FDI could even impact gender inequalities in labour force participation. The purpose of this paper is to investigate whether and how FDI inflow is affecting African countries’ gender differences in the labour force participation in the agriculture, industry, and service sector. Drawing on cross-sectional data from the World Bank, the United Nations Development Program and the Quality of Government database, this analysis reveals that FDI has a heterogenous impact on gender inequalities in labour force participation in 41 African countries. Although increasing gender equality in the agriculture sector, FDI decreases inequalities in the industry and service sector. The findings emphasize the characteristics of the countries’ labour force, educational level and literacy level to be the most determinising factors to whether inequalities are going to increase or decrease in a sector. FDI ́s greatest impact concerns the unskilled labour force. Women represent the majority of the unskilled labour force, which is why they should be benefiting most from FDI. In conclusion, governments in African countries could regulate the increase of labour force participants by promoting FDI.