Sectoral analysis of female employment and economic growth: evidence from OIC countries

This study investigates the relationship between sectoral female employment and economic growth in 56 member countries of the Organization of Islamic Cooperation (OIC) from 1998 to 2024. Utilizing panel data and various econometric models, including Ordinary Least Squares (OLS), 2SLS, fixed effects, and Generalized Method of Moments (GMM), the research suggests that, once endogeneity and dynamics are controlled for, female employment in industry is positively and significantly associated with GDP growth, while female employment in agriculture, services, and self‑employment become statistically insignificant. Lagged GDP and foreign direct investment are the most consistent drivers of growth. The findings highlight the need for targeted policies to address sector‑specific challenges, enhance productivity, and support female employment in alignment with cultural and religious norms to optimize economic development in OIC countries. This study is limited by its reliance on panel data, which may not fully capture country‑specific nuances and cultural factors affecting female employment and economic growth in OIC countries. For academia, the findings challenge aggregate‑level analyses by demonstrating that sectoral decomposition (industry vs. agriculture/services) fundamentally alters conclusions about female employment and growth, and that dynamic GMM with collapsed instruments is essential to avoid instrument proliferation. For practice, policymakers in OIC countries should prioritize industrial formalisation and export‑oriented FDI for female workers, while improving productivity in agriculture and services through skills training and access to credit, rather than relying on sectoral reallocation alone.