Open trade and reform policies that facilitate more efficient labor markets and afford workers new opportunities benefit everyone, but particularly women in developing economies, according to economists Nadia Rocha and Roberta Piermartini. In this astute analysis, the authors note that tariffs, protectionism and other obstacles hinder women’s economic advancement. Rocha and Piermartini offer ideas for labor market policies that will help women learn new skills, expand their education, and increase their mobility and access to regions offering better employment opportunities.
- Gender equality is a basic human right and an economic priority.
- Gender parity benefits women and economies in numerous ways.
- Policy reforms can help eliminate economic discrimination.
Gender equality is a basic human right and an economic priority.
Extensive research has demonstrated the wisdom of gender equality. The work of both men and women helps economies around the world. Developing economies, which feature a greater inequality gap, need the benefits that working women provide.
“Countries that are open to international trade tend to grow faster, innovate more, improve productivity, and provide higher income and more opportunities to their people.”
Global trade can elevate women’s participation in the economy, mitigating inequality and affording women more opportunities for education and training. Women in developing economies constitute one-third of exporters’ employees, as opposed to one-quarter of the employees in firms that do not export. Exporting companies pay more and hire more women, thus reducing economic disparities. By virtue of their integration with global value chains, exporters create better and more secure employment, benefits and learning opportunities. By increasing open trade, exporters raise women’s compensation and consumption, thereby aiding the overall economy.
Gender parity benefits women and economies in numerous ways.
Cross-border economic integration favors women in developing markets, allowing them to work in more sectors of the economy. The costs of goods decrease, allowing women to consume more, which, in turn, benefits firms by increasing their sales. Conversely, heightened trade competition increases the costs of discriminating against women.
“Opening up to trade therefore benefits women in developing economies because it expands the sectors where women work, reduces prices for the goods women consume and allows firms that are more productive to grow.”
Three current trends present further economic growth opportunities for women: First, the expansion of service-oriented economies will benefit women, as services produce more jobs. Second, global value chains facilitate the connections of smaller businesses, many run by women, to worldwide markets. Third, the proliferation of digital services will accelerate women’s access to finance and education, allowing for greater mobility and flexibility. The advantages of digital services, moreover, have enabled a marked increase in women-owned businesses in the recent past.
Policy reforms can help eliminate economic discrimination.
As positive as these trends are, they will not reduce gender inequality without policy reforms. Sectors of the economy that employ more women, such as food, textiles and apparel, face higher tariffs on input items. Female producers bear the costs for these inputs and are subject to greater export constraints than their male counterparts. Other obstacles include product standards and regulatory provisions, both of which are fixed costs that disproportionately affect smaller businesses. Small-scale exporters that ship limited quantities infrequently are often subject to burdensome administrative costs. Limited access to trade credit and greater risks of extortion and harassment also hinder gender parity.
“The recent rise in protectionist pressures, global value chain reshaping and geopolitical tensions all threaten to reverse the gains in gender equality achieved so far. Open trade will be essential to designing a gender-inclusive economic recovery.”
Global cooperation on tariff reductions and trade support to simplify regulatory requirements for exports implicitly advance gender parity. Policies to support access to training, technology and finance would help female-owned and -run trading concerns. Such measures will be all the more important in the wake of the COVID-19 pandemic, which inordinately struck sectors that employ women who bear the burden of family care. Open trade will serve as a counterweight to recent threats of protectionism, geopolitical ructions and value chain redesign.
About the Authors
Nadia Rocha is a lead economist at the World Bank. Roberta Piermartini is chief of trade cost analysis at the World Trade Organization.