When Saudi Arabia announced last September it would lift its ban on women driving, the decision was partly driven by economic interests, Prince Khaled Bin Salman, the Saudi ambassador to the U.S., told Reuters.
By removing such restrictions, the country’s leaders said they aimed to increase women’s participation in the workforce from 22 percent to 30 percent in the next 12 years, a component of the Vision 2030 Plan government blueprint for economic growth. With oil prices down, the country is seeking to diversify its economy by turning, in part, to women.
Greater gender equality can play a role in boosting economic growth, say analysts, prompting a number of countries to launch efforts to increase the number of women in their labor forces. In fact, higher labor force participation by women can offset a shrinking workforce, according to the International Monetary Fund.
“Today, in 2018, we have a strong body of evidence that shows that women’s participation in the economy is critical because when women are able to fulfill their economic potential, GDP goes up and poverty goes down,” says Rachel Vogelstein, senior fellow at the Council on Foreign Relations in Washington, in referring to gross domestic product.
But as the world celebrates International Women’s Day today, women in many countries still face legal, structural and cultural barriers blocking their full economic participation — and limit those countries’ potential. A report from the Asian Development Bank found that East Asian and Pacific countries lose up to $47 billion each year due to lower labor force participation by women.
The 2018 Best Countries survey asked respondents from 36 countries about their views on women’s rights and opportunities. More than one in five respondents in Saudi Arabia, Japan and Egypt disagreed that women deserve equal rights as men.
Those views could hamper their economic development, say analysts — a big loss, as all three countries rank in the top 15 in the Best Countries Movers list, a ranking of countries seen as having economies on the rise.
“When we look at emerging or developed markets, how a country manages half of its labor force is important to growth,” says Joseph Quinlan, head of market and thematic strategy at Bank of America.
Saudi Arabia acquired its significant wealth — the country ranks in the top quarter of countries for GDP per capita according to the World Bank — due to its ample supply of oil. But now, with oil prices down, it’s moving to diversify its economy by investing in human capital, says Matthias Doepke, an economist at Northwestern University who studies gender, family and economic development.
Changes are afoot in Japan, too. Bringing more women into the workforce is considered a pillar of “Abenomics,” the economic plan of Prime Minister Shinz? Abe. Japan’s economy has been hampered by its shrinking and aging population, and research by Goldman Sachs found eliminating the gender gap in employment could increase the country’s gross domestic product by up to 13 percent.
[SEE: These Are the Best Countries for Women]
The country has expanded child care services and removed a tax deduction for dependent spouses, among other measures. Abe’s reforms coincide with a long-term increase in women’s workforce participation, which rose from 67 percent in 2000 to 76 percent in 2016, according to data from the Organization for Economic Cooperation and Development.
The moves in Japan and Saudi Arabia reflect a general trend toward increasing gender equality worldwide, albeit a slow one. The worldwide gender gap in labor participation dropped from 32 to 26 percentage points between 1980 and 2008, according to the World Bank.
“This is evolution, not revolution,” Quinlan says.
Research shows investing in gender parity in the workforce pays off — both for women and for the economy at large. Greater participation by all genders makes the economy more productive, according to the World Bank. And keeping girls in school helps prepare them for knowledge-based jobs that can help spur growth, says John McArthur, senior fellow at the Brookings Institution, the Washington-based research organization.
“The more people that are creating, the more people that are innovating, the more that contributes to economic development writ large,” McArthur says.
Leaps in education levels explain half of the growth in OECD countries in the last half-century, largely because women attained higher levels of education, according to an OECD report.
A 2015 report from the McKinsey Global Institute found that if women worldwide matched men in economic participation, the boon would increase the world’s GDP by $28 trillion, or 26 percent, by 2025. Some economists have expressed reservations about tying improvements to dollar figures, citing the complicated nature of such calculations.
Regardless, keeping women in the classroom and the workforce has social benefits. The World Bank found that when women exercised greater control over their families’ resources, the family spent more on children’s food and education. Increasing education for girls reduces mortality rates for infants, children and mothers, and better incorporating them into politics means more money gets spent on social issues such as health and education.
But barriers still prevent women’s full economic participation.
Ninety percent of countries have at least one law that impedes women’s participation in business, like laws that restrict women from signing contracts, opening bank accounts or owning property, according to the World Bank. Twenty-eight countries, most of which are in the Middle East or Africa, have 10 or more such laws. Saudi Arabia has the most with 29.
“When you look at the economies of those regions, I’d argue there’s a relationship between women’s ability to participate in the economy and the economic health of those countries,” Vogelstein says.
Structural barriers like educating girls for fewer years or placing the burden of unpaid household labor on women also inhibit them from holding full-time, high-paying jobs, notes the Council on Foreign Relations.
Cultural norms such as high rates of child marriage or opposition to the idea of women holding jobs outside the home can reduce their workforce participation. Despite Japan’s policy shifts to encourage women to work, two-thirds still quit their jobs when they get married or have children.
Some norms evolve as the economy grows. Doepke, the Northwestern economist, points to the U.S., where a burgeoning postwar economy in the 1950s and 1960s meant a greater demand for workers. Working women became more culturally acceptable.
Other barriers, particularly legal ones, require government intervention to eliminate.
“For a country to sit back and say, ‘We’ll wait ’til we get rich to start leveling the playing field,’ it’s not enough,” says Sudhir Shetty, chief economist for the East Asia and Pacific region for the World Bank. “Because some of these gender gaps don’t go away as a country gets richer.”
And economists say investment in women’s economic participation is a relatively underutilized tactic to spur economic growth. Less than 2 percent of development aid in OECD countries goes toward women’s economic empowerment.
“For the sheer size of the population we’re talking about, that speaks to dramatic under-investment in women’s empowerment,” Vogelstein says. “What that amounts to is leaving money on the table.”
More from U.S. News
U.S. Women Participating in Workforce at Lower Level Than Other Developed Countries
Top 5 Countries for Women in Science
These Are the Best Countries for Women
Lower Participation in Workforce by Women Limits Economic Growth, Experts Say originally appeared on usnews.com
