Breaking barriers: the impact of foreign direct investment on gender inequality in Indonesian firms

Foreign direct investment (FDI) is an unavoidable factor in the global economy that determines economic development, including gender equality. Indonesia is one of the developing countries attracting significant investment in Southeast Asia. However, data on gender inequality shows a relatively high figure and has experienced a slow decline over the past five years (from 0.488 in 2019 to 0.447 in 2023). Considering this, the objective of this study is to investigate the effect of FDI on gender inequality in Indonesia by utilizing micro-survey data at the firm level from the World Bank Enterprise Surveys (WBES). Using a linear regression model, our findings indicate that FDI negatively affects gender inequality, suggesting that higher FDI tends to widen it. Our findings also confirm robustness across various model scenarios, including the PSM-DID and panel logit regression model.