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 Girls are often withdrawn from schools to help with household work and informal enterprises during times of economic crisis, reinforcing gender gaps in education.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.
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Steve Ovett, the famous British middle-distance athlete, won the 800-metres gold medal at the Moscow Olympics of 1980. Just a few days later, he was about to win a 5,000-metres race at London’s Crystal Palace. Known for his burst of acceleration on the home stretch, he had supreme confidence in his ability to out-sprint rivals. With the final 100 metres remaining,
[wptelegram-join-channel link=”https://t.me/s/upsctree” text=”Join @upsctree on Telegram”]Ovett waved to the crowd and raised a hand in triumph. But he had celebrated a bit too early. At the finishing line, Ireland’s John Treacy edged past Ovett. For those few moments, Ovett had lost his sense of reality and ignored the possibility of a negative event.
This analogy works well for the India story and our policy failures , including during the ongoing covid pandemic. While we have never been as well prepared or had significant successes in terms of growth stability as Ovett did in his illustrious running career, we tend to celebrate too early. Indeed, we have done so many times before.
It is as if we’re convinced that India is destined for greater heights, come what may, and so we never run through the finish line. Do we and our policymakers suffer from a collective optimism bias, which, as the Nobel Prize winner Daniel Kahneman once wrote, “may well be the most significant of the cognitive biases”? The optimism bias arises from mistaken beliefs which form expectations that are better than the reality. It makes us underestimate chances of a negative outcome and ignore warnings repeatedly.
The Indian economy had a dream run for five years from 2003-04 to 2007-08, with an average annual growth rate of around 9%. Many believed that India was on its way to clocking consistent double-digit growth and comparisons with China were rife. It was conveniently overlooked that this output expansion had come mainly came from a few sectors: automobiles, telecom and business services.
Indians were made to believe that we could sprint without high-quality education, healthcare, infrastructure or banking sectors, which form the backbone of any stable economy. The plan was to build them as we went along, but then in the euphoria of short-term success, it got lost.
India’s exports of goods grew from $20 billion in 1990-91 to over $310 billion in 2019-20. Looking at these absolute figures it would seem as if India has arrived on the world stage. However, India’s share of global trade has moved up only marginally. Even now, the country accounts for less than 2% of the world’s goods exports.
More importantly, hidden behind this performance was the role played by one sector that should have never made it to India’s list of exports—refined petroleum. The share of refined petroleum exports in India’s goods exports increased from 1.4% in 1996-97 to over 18% in 2011-12.
An import-intensive sector with low labour intensity, exports of refined petroleum zoomed because of the then policy regime of a retail price ceiling on petroleum products in the domestic market. While we have done well in the export of services, our share is still less than 4% of world exports.
India seemed to emerge from the 2008 global financial crisis relatively unscathed. But, a temporary demand push had played a role in the revival—the incomes of many households, both rural and urban, had shot up. Fiscal stimulus to the rural economy and implementation of the Sixth Pay Commission scales had led to the salaries of around 20% of organized-sector employees jumping up. We celebrated, but once again, neither did we resolve the crisis brewing elsewhere in India’s banking sector, nor did we improve our capacity for healthcare or quality education.
Employment saw little economy-wide growth in our boom years. Manufacturing jobs, if anything, shrank. But we continued to celebrate. Youth flocked to low-productivity service-sector jobs, such as those in hotels and restaurants, security and other services. The dependence on such jobs on one hand and high-skilled services on the other was bound to make Indian society more unequal.
And then, there is agriculture, an elephant in the room. If and when farm-sector reforms get implemented, celebrations would once again be premature. The vast majority of India’s farmers have small plots of land, and though these farms are at least as productive as larger ones, net absolute incomes from small plots can only be meagre.
A further rise in farm productivity and consequent increase in supply, if not matched by a demand rise, especially with access to export markets, would result in downward pressure on market prices for farm produce and a further decline in the net incomes of small farmers.
We should learn from what John Treacy did right. He didn’t give up, and pushed for the finish line like it was his only chance at winning. Treacy had years of long-distance practice. The same goes for our economy. A long grind is required to build up its base before we can win and celebrate. And Ovett did not blame anyone for his loss. We play the blame game. Everyone else, right from China and the US to ‘greedy corporates’, seems to be responsible for our failures.
We have lowered absolute poverty levels and had technology-based successes like Aadhaar and digital access to public services. But there are no short cuts to good quality and adequate healthcare and education services. We must remain optimistic but stay firmly away from the optimism bias.
In the end, it is not about how we start, but how we finish. The disastrous second wave of covid and our inability to manage it is a ghastly reminder of this fact.