Repelling Rape: Foreign Direct Investment Empowers Women

For marginalized social groups, global economic integration can offer new economic opportunities but may also trigger backlash by dominant groups. Foreign direct investment (FDI), we argue, fosters women’s empowerment that is resilient to male backlash because it increases women’s income and introduces gender equality norms. India’s sudden 2005 FDI liberalization allows us to identify FDI’s causal effect on women’s empowerment and rape, a violent manifestation of male backlash. In FDI-exposed districts, rape declined, women’s relative wage growth doubled, and women voiced stronger support for women’s empowerment. Women in these districts exercised household bargaining leverage and political participation in ways that increased safety. FDI from low gender equality countries, which raises income but lacks equality norms, increases incidence of rape. We rule out several alternative mechanisms. Our findings establish a new channel through which economic integration advances social equality.