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Gender as the new driver of growth

LiveMint logoLiveMint 27-07-2017 Ejaz Ghani

Although our understanding of the linkages between gender and growth is still evolving, there is mounting evidence that economic crises affect women more than men. Women are often laid off first as men are traditionally considered to be the main breadwinners. Economic shocks that worsen infrastructure, physical and human, affect women more than men by reducing their access to markets and basic services. Girls are often withdrawn from schools to help with household work and informal enterprises during times of economic crisis, reinforcing gender gaps in education.

Gender as a new growth driver has begun to attract the attention of policymakers in recent years. Economic growth and development depend upon successfully utilizing the workforce, both male and female. Recent estimates suggest that increasing the female participation rate to that of men could potentially raise economic growth by as much as 5%. While achieving economic growth sometimes requires tough structural reforms and choices (e.g., progressive taxation that may discourage effort), the opposite is true for gender as a driver of growth.

Multilateral global institutions have scaled up the importance of gender in their growth work. The International Monetary Fund (IMF) has increased the focus on gender and growth in Article IV consultations in a diverse group of countries, including Chile, Costa Rica, Egypt, Guatemala, Hungary, India, Iran, Jordan, Mali, Macedonia, Mauritius, Morocco, Niger, Nigeria, Pakistan, Poland and Rwanda. The World Bank has also increased its focus on gender-informed lending and advisory services. A range of structural policy reforms are being implemented to eliminate gender distortions to promote sustainable growth.

Eliminating the obstacles faced by women in economic participation comes in many forms. Fiscal and financial reforms that eliminate gender gap can play a vital role. Some 60 countries, including Rwanda and Mexico, have already introduced gender budgeting. Gender budgeting improves gender equality through well-structured fiscal policies and adequate and properly monitored spending on gender-related goals. In some countries, gender budgeting has inspired fiscal policies in key areas of the budget, such as education, health, and infrastructure, that contributes to the achievement of gender-related goals. It has also improved systems of accountability for public spending for gender-related purposes.

Gender-focused structural reforms can increase women’s contribution to productivity growth, job growth, and improve advancement practices that promote talented women into leadership and managerial roles. Empowering half of the potential workforce has significant growth benefits, that go beyond promoting just gender equality.

One factor contributing to the slow progress in closing the gender gap is the lack of resources to implement promising gender policy initiatives. Governments mobilize resources for gender equality from multiple sources, including taxes, overseas development assistance and through public-private partnerships. But progress has been slow from mobilizing resources to close the gender gap.

Domestic resources are particularly important for accelerating progress on gender equality. First, investing its own resources signals that a country is committed to achieving gender equality, which is important for both economic and ethical reasons. Second, only domestic resources can ensure longer-term sustainability for those interventions and activities that are needed to create the fundamental transformation in the way that societies conceive of and organize men’s and women’s roles and responsibilities.

There are many issues that remain unresolved on gender as a new driver of growth. Should policymakers focus on gender-neutral or gender-targeted policy reforms? How do deficiencies in social and business networks affect women entrepreneurs? Is market competition sufficient to eliminate gender segmentation? While policy interactions can be country-specific, gender and growth are intimately linked. Policy and structural reforms to eliminate gender gap can be a powerful tool for accelerating growth.

India is simultaneously a leader in promoting women’s participation in government but also a laggard in gender issues in the workplace. Its growth rate for manufacturing has been disappointing compared to its potential.

Gender-based segmentation has not subsided in India. India’s gender balance in entrepreneurship and jobs remains among the lowest in the world. Improving this balance is an important first step for India’s development and its achievement of greater economic growth and gender equality.

Globalization and trade policy reforms have made a limited contribution towards India’s convergence in gender segmentation, while domestic pro-competitive reforms are strongly associated with lower segmentation among male employees. Policies targeting the domestic competitive environment have been more effective in mitigating gender discrimination in the labour market.

Gender budgeting efforts need to address key gender-related education and health goals as well as public infrastructure deficiencies, such as household access to clean water or electricity, that impose high unpaid work burdens on girls and women. Gender budgeting efforts can also contribute to improved administration of justice, law, and order, to help reduce violence against girls and women.

The international community, under the aegis of the UN, has been pursuing gender equality since 2000, which now features as one of the primary Sustainable Development Goals (SDGs). Empowering women to engage in productive employment is critical to achieving not only this SDG but is also pivotal to economic growth, poverty eradication, reducing child mortality, improving maternal health, and attaining universal primary education.

Gender is the new driver of economic growth. This growth will come in many forms: increased female labour force participation, improved access to land and bank loans, and higher levels of political representation. Simply put, empowering half of the potential workforce has significant economic benefits beyond promoting gender equality.

Ejaz Ghani is lead economist at the World Bank.

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