Gender diversity, foreign direct investment spillovers, and productivity: Unraveling the role of female workers in Indonesia

This study investigates the impact of gender diversity on firm productivity following foreign direct investment (FDI) spillover. Using Indonesian firm-level datasets from 2011 to 2015, we employ gender spillovers to assess women's distinct contributions to labor spillovers, often manifested through their impacts on productivity, knowledge sharing, and innovation. A fixed-effects estimator using Driscoll and Kraay's standard errors was employed to deal with cross-sectional dependence. We first examined the intra-industry spillover effects of FDI, followed by spatial spillovers, to evaluate the influence of one province's productivity changes on neighboring provinces. Our findings reveal significant gender-driven FDI spillovers in the spatial dimension but not within the sector. The consistent results across subsamples (impacts on domestic firms, Java-non-Java Island, feminization degree, and industrial technology intensity) align with theoretical studies that emphasize the influence of geographical proximity on FDI spillovers. No significant intra-industry spillover effects were observed. Further exploration of informal channels, possibly mediating spillover effectiveness, is recommended to provide insights into the observed sectoral dynamics.