Effects of Foreign Direct Investment in Manufacturing : Gender-Specific Employment in Indonesia

Indonesia was hit hardest by the Asian financial crisis in 1997 from which it still has not recovered. Attracting inward foreign direct investment (FDI) is viewed as crucial for the revitalisation of the Indonesian economy after the crisis. However, the implications of FDI for employment and particularly for gender-specific employment are disputed both in theory and on the basis of empirical research.
This paper explores possible effects of FDI on gender-specific employment in manufacturing, assessing the assumption that FDI increases relative female employment. In order to test this hypothesis, interviews with key informants and the 1996 Indonesian manufacturing survey are analysed.
The results show that FDI does not have the expected positive effect on relative female employment but it displays considerable interactions with gender-specific human capital endowment and the extent of female autonomy. They suggest a review of assumptions about the beneficial effects of FDI on female labour market integration and the positive effect of investment in female human capital on women’s economic empowerment.