Empowering the World’s Women Would Fuel Economic Growth

iStock_000021795969XSmallBy Melissa J. Anderson (New York City)

Last week, the World Economic Forum released its Global Gender Gap report for 2012. As usual, Nordic countries dominated the top of the index, which ranks countries on how close they are to minimizing the gap between male and female equality.

In the report, the WEF also highlights a large group of countries, like Japan, Quatar, Mexico, and Saudi Arabia, that have made investments in women’s health and education, but have not removed barriers to women’s participation in the workforce. The study authors, Ricardo Hausmann, Harvard University; Laura D. Tyson, University of California, Berkeley; and Saadia Zahidi, World Economic Forum, believe that by removing the barriers to women’s workforce participation in these countries, the global economy would grow significantly.

“The index continues to track the strong correlation between a country’s gender gap and its national competitiveness, income and development. A country’s competitiveness depends on its human talent – the skills, education and productivity of its workforce. Because women account for one-half of a country’s potential talent base, a nation’s competitiveness in the long term depends significantly on how it educates and utilizes its women.”

Focusing on women’s health and education are only two steps toward equality. Empowering the world’s women at work would fuel economic growth in their own countries and around the globe.

How the Index Works

For some people, it could be easy to discount the value of the list – claiming that because Nordic countries are relatively rich and stable, of course they top the list, given their resources and power. But, that claim would be off-base. The report authors took pains to explain that the index ranks countries by the size of the gap between how men and women are treated within each national context, rather than the level of, for example, educational attainment compared on a global scale.

That also explains why countries richer than Iceland, Finland, Norway, Sweden, and Ireland (the top five) are less successful at closing the gap. For example, the United Kingdom ranks number 18 on the list, and the United States ranks number 22.

The index combines each country’s score on four gap measurements: health, education, political representation, and economic participation. That means there are different routes for each country to get to a high rank on the index.

For example, Iceland, Finland, Norway, Denmark, and several other countries (like New Zealand and the Philippines) are all tied for number one when it comes to educational attainment, while Sweden (number four overall) ranks 39th in education. Conversely, Sweden was ranked number ten for economic participation, while Iceland (number one overall) was ranked 27th in this category. Mongolia (44th overall) was ranked number one here.

Economic Empowerment

The WEF believes that empowering women economically could boost the world’s economic growth significantly, and this idea is represented by the oft-repeated refrain that women make up half of the world’s workforce. Empowering them at work would cause economic power to increase as well. Even countries at the top of the list would benefit from a concerted effort to decrease the economic gap. The report says:

“According to research, the reduction in the male-female employment gap has been an important driver of European economic growth in the last decade and closing this gap would have massive economic implications for developed economies, boosting US GDP by as much as 9% and euro zone GDP by as much as 13%.”

Beyond those countries that are approaching equality, is the group of countries that still has work to do. The countries in the next segment – ones that have removed educational and health barriers but still have a lot of work to do in the economic and political arena – could see an even bigger boost.

“These countries have an untapped but educated talent pool and would have much to gain through women’s greater participation in the workforce. A study has shown that closing the gap between male and female employment would boost Japanese GDP by as much as 16%. A report by the United Nations Economic and Social Commission for Asia and the Pacific Countries found that restricting job opportunities for women is costing the region between US$ 42 and US$ 46 billion a year.”

It’s no surprise that many of the countries in this group lie in regions cited for massive growth in the next few years. A new report by Booz & Company, The Third Billion, discusses how multinational companies can usher in this change in society.

“By hiring women in developing markets, they can facilitate women’s independence and increase their stature in society. They can bolster their own talent base by creating opportunities worldwide for women to move into senior positions. They can support female entrepreneurs by setting goals for more diverse supply chains. And they can leverage their power as investors by promoting gender equity in the workplace; providing financing for women-owned businesses; and developing jobs, products, and services that benefit women.”

Booz adds, “Yet the global economy does not have the luxury of addressing this crucial group in a leisurely fashion, one woman at a time.”

By recognizing the power of employers in developing markets that may be ambivalent about the economic participation of women, companies can change the social status of women in these areas, while bolstering global economic growth at the same time.