Gender Diversity, Innovation, and Economic Growth: A Multi-Country Analysis

Zafir Ullah Khan, Muhammad Zubair Khan, Amin Ullah Khan

Abstract

Studies show that gender diversity promotes creativity and innovative ideas. This paper highlights the link through which gender diversity affects the generation of innovative ideas. The paper modified the Jones (1995) R & D model by assuming that a team consisting of females would be able to generate more ideas and explicitly included gender diversity in the innovation function along with other factors. The paper used a robust check to identify the relevant estimation econometrics method and the results indicated that the Dynamic System Generalized Method of Moment (GMM) is suitable for estimating the impact of gender diversity on economic growth. To lend support to theoretical linkages, the paper employed the dynamic system Panel GMM to examine how gender diversity at the workforce impacts growth via its impact on the generation of innovative ideas using a sample of fifty-four countries for the period 1984-2017. The correlation analysis shows that gender diversity positively affects the economic growth performance of the panel countries. After considering the effect of gender diversity, the coefficient of patents granted improved, which confirms the hypothesis that gender diversity contributes to the growth process through its impact on the generation of innovative ideas. The results show that internet use, mobile usage, and trade liberalization work as channels of diffusion of innovation. The paper also finds gender diversity to be a proxy of informal institutions. Our findings suggest that gender diversity has a significantly positive impact on economic growth through the generation of novel ideas by a gender-diverse team at the workplace. The results have policy implications for policymakers and business managers.