Womenomics: How gender equality drives economic growth

Research indicates that countries with higher gender equality tend to have stronger economies. By investing in women’s empowerment and dismantling gender barriers, we unlock a powerful force for economic growth, improved social well-being, and lasting peace and stability.

The pursuit of gender equality has long been recognised as a fundamental human rights issue. In recent years, it has increasingly been acknowledged as a key driver of economic growth. It is disheartening that, in the 21st century, we are still having to discuss gender equality, which should have been resolved long ago. The fact that women are still fighting for equal rights and opportunities is a testament to the deep-rooted prejudice and discrimination that still exist in our society. It is a reminder of the long road that we have yet to travel before we can truly achieve a world where everyone is treated with dignity and respect, regardless of their gender.

Research indicates that countries with higher gender equality tend to have stronger economies. For instance, a study by the World Bank found that countries with the most gender-equal economies experience an average annual GDP growth rate of 0.8 percentage points higher than those with the most unequal economies. This difference in growth rates is equivalent to an additional 20% of GDP over a 15-year period. There are several reasons why gender equality can boost economic growth. 

First, women are a valuable source of labour and entrepreneurship. When women have equal opportunities to participate in the workforce, they can contribute their skills, talents, and knowledge to the economy. This can lead to increased productivity, innovation, and overall economic output. Second, gender equality can help improve family well-being. When women have more economic opportunities, they are better able to support their families and invest in their children’s education and health. This can lead to better productivity and a healthier workforce in the future. Third, gender equality can help promote peace and stability. Societies that are more equal are less likely to experience conflict and violence.

There are many examples of countries that have achieved significant economic growth because of their efforts to promote gender equality. For example, Rwanda has made substantial progress in closing the gender gap in education and employment. As a result, the country has one of the highest rates of female labour force participation in Africa. This has contributed to Rwanda’s rapid economic growth, averaging over 7% per year for the past decade. 

Another example is Iceland, a leader in gender equality. The country ranks first in the world on the WEF’s Global Gender Gap Index, due in part to Iceland’s commitment to policies that promote women’s economic participation, such as paid parental leave and flexible work arrangements. Iceland has one of the highest levels of
female labour force participation in the developed world.

Despite the evidence that gender equality is good for business and the economy, challenges remain:

Stereotypes and discrimination: Women and girls are often held back by stereotypes and discrimination that limit their access to education, employment, and leadership opportunities. 

Limited access to resources: Women often lack access to the resources they need to start and grow businesses, such as capital, training, and mentorship. 

Lack of support for families: Policies that support families, such as paid parental leave and flexible work arrangements, are absent.

As the world continues to grapple with the challenges of economic inequality and social unrest, gender equality offers a promising path to a more prosperous and equitable future.

Studies have shown that countries that achieve higher levels of gender equality enjoy a host of economic benefits, including: 

Enhanced labour force participation and productivity: Gender equality opens a broader pool of talent, allowing countries to fully utilise their human capital. Women’s participation in the workforce not only increases the overall labour force but also brings fresh perspectives, skills, and experiences to the table. This diversity in the workforce can boost innovation, creativity, and problem-solving, leading to increased productivity and economic growth.

Expanded consumer base and consumption: As women gain economic independence and participate more fully in the workforce, their purchasing power increases. This expanded consumer base drives demand for goods and services, stimulating economic activity and fueling growth in various sectors, from retail and consumer goods to services and infrastructure.

Reduced poverty and inequality: Gender equality goes hand in hand with poverty reduction. When women have equal access to education, employment opportunities, and resources, they are better equipped to support themselves and their families. This can help break the cycle of poverty and reduce overall income inequality within a country.

Improved health outcomes and education levels: Gender equality contributes to improved health outcomes and education levels for both men and women. When women are empowered and have control over their reproductive health, they are more likely to have healthier children and families. Additionally, gender equality in education leads to a more educated and skilled workforce, which in turn contributes to economic growth. 

Greater Peace and Stability: Societies that achieve gender equality are often more peaceful and stable. Gender-based discrimination and inequality can breed resentment, conflict, and violence. By promoting gender equality, we create a more just and equitable society, reducing the risk of social unrest and conflict.

In the face of persistent economic challenges and social divisions, gender equality stands as a beacon of hope for a more prosperous and equitable future. By investing in women’s empowerment and dismantling gender barriers, we unlock a powerful force for economic growth, improved social well-being, and lasting peace and stability.

(The writer is Professor, Berlin School of Business and Innovation, Germany)