Enhancing productivity in emerging economies depends on mitigating factors that cause gender discrimination, say Ioannis Bournakis and Jen-Chung Mei.
This paper measures gender premium (or penalties) in productivity and innovation using firm-level data from 32 emerging economies. Further, we estimate whether the gender status of local firms in foreign direct investment (FDI) recipient countries, as well as the ownership structure of Multinational Enterprises (MNEs), matters for the size of spillovers from supply and purchase links between local firms and MNEs.
Our results show that female-owned firms are on average less innovative and productive. These gender performance handicaps cancel out Total Factor Productivity (TFP) gains through supply linkages with MNEs. In general, domestic firms benefit from the supply of inputs to MNEs not only in terms of TFP, but also in a number of characteristics related to innovation, and this highlights the importance of backward spillovers on the performance of FDI host countries. Nonetheless, domestic female-owned firms cannot reap any of these gains.
There is also a gender penalty imposed by MNEs on local firms’ TFP. Female-owned MNEs do not promote technology transfer through spillovers to local firms, which might be another explanation for why domestic firms do not usually experience productivity gains when purchasing inputs from foreign firms.
A key message of the present paper is that enhancing productivity in emerging economies depends on mitigating factors that cause gender discrimination. Eliminating any gender penalty in firm performance will also help local firms absorb spillovers from MNEs.
