The New Cold War
America, China, and the Echoes of History
In June, Saudi Arabia will make it legal for women to drive, marking the end of one of the world’s most conspicuous examples of gender discrimination. The ban’s removal has been rightly hailed as a victory in a country that systematically limits women’s freedoms. But for Saudi officials, this policy reversal has more to do with economics than concern for women’s rights. In recent years, even culturally conservative countries such as the Gulf kingdom have begun to recognize that they cannot get ahead if they leave half of their human capital behind.
Women’s advocates have long championed gender parity as a moral issue. But in the modern global economy, eliminating obstacles to women’s economic participation is also a strategic imperative. A growing body of evidence confirms the positive relationship between women’s participation in the labor force and overall growth. In 2013, the Organization for Economic Cooperation and Development concluded that a more gender-balanced economy could boost GDP by an estimated 12 percent in OECD countries. The International Monetary Fund (IMF) has made similar predictions for non-OECD countries, projecting that greater female economic participation would bring GDP gains of about 12 percent in the United Arab Emirates and 34 percent in Egypt. All told, according to a 2015 report by the McKinsey Global Institute, closing gender gaps in the workplace could add an estimated $12 trillion to global GDP by 2025.
Yet legal barriers to female economic enfranchisement persist in every region of the world, in both developed and developing economies. According to the World Bank, women face gender-based job restrictions in 155 countries, including limitations on property ownership, spousal consent requirements for employment, and laws that prevent them from signing contracts or accessing credit. In many nations, women are still barred from traditionally male jobs or face limits on the number of hours they can work. In Russia, women cannot seek employment in 456 specific occupations, from woodworking to driving a subway. Argentina prohibits women from entering “dangerous” careers, such as in mining, manufacturing flammable materials, and distilling alcohol. French law prevents women from holding jobs that require carrying 25 kilograms (about 55 pounds). In Pakistan, women cannot clean or adjust machinery.
Many economists and analysts are understandably skeptical about the potential for change. After all, deeply embedded cultural norms underpin these discriminatory legal systems. But there is reason to be hopeful. Recognizing the economic imperative, leaders across the globe are pushing for reform. In the last two years alone, 65 countries enacted almost 100 legal changes to increase women’s economic opportunities.
“Fully unleashing the power of women in our economy will create tremendous value but also bring much-needed peace, stability, and prosperity to many regions,” Ivanka Trump, an adviser to her father, U.S. President Donald Trump, said at a women’s entrepreneurship forum in October. Progress, however, will require more than lofty rhetoric. To make real strides in unshackling women’s economic potential, the United States will have to use its international clout and foreign aid budget to drive legal reform, not just at home but also in countries across the globe where women cannot fully engage in the economy.
MOMENTUM FOR REFORM
The economic case for eliminating restrictions on women’s economic participation is clear. In Saudi Arabia, for example, women earn more than half of all college and graduate degrees but compose only about 20 percent of the labor force. This means that the economic potential of nearly a third of the population remains untapped. As the Saudi economy struggles to cope with low oil prices, increasing female work-force participation has become part of Crown Prince Mohammed bin Salman’s ambitious economic modernization effort, known as Saudi Vision 2030. Lifting the driving ban shows that the country is serious about changing the status quo, although many other laws continue to circumscribe the rights of women in the Gulf kingdom.
Women face gender-based job restrictions in 155 countries.
Even in countries that have far fewer stark gender disparities than Saudi Arabia, leaders have sought to spur economic growth by making it easier for women to participate. In the 1990s, Canadian lawmakers eliminated the so-called marriage penalty, the product of a tax code that had depressed the incomes of secondary earners by requiring couples to pay higher rates in comparison to single taxpayers. In Japan, Prime Minister Shinzo Abe’s “womenomics” agenda has put female workers at the center of the country’s growth strategy by increasing child-care benefits and incentivizing family-friendly workplace reforms. And in Bangladesh, cabinet ministers are seeking to advance economic development by increasing the share of women in the workplace through infrastructure initiatives, such as bringing electricity to rural areas. These projects reduce the burden of unpaid labor by making household work less time consuming, thereby freeing up time for paid work outside the home.
Countries that have pursued such reforms are already seeing results. In India, after two states changed their succession laws in 1994 to grant women the same right to inherit family property as men, women became more likely to open bank accounts, and their families started to enjoy more financial stability, according to a study conducted by the World Bank in 2010. Similarly, in Ethiopia, since the government eliminated the requirement for a woman to get her husband’s consent in order to work outside the home, in 2000, considerably more women have entered the work force and obtained full-time, higher-skilled—and therefore better-paying—jobs. Five years later, women in the three regions where the policy was first implemented were 28 percent more likely to work outside their homes and 33 percent more likely to hold paying jobs than women elsewhere in the country, according to a World Bank analysis. These reforms not only increase women’s income but also create a multiplier effect, as women are more likely to invest their earnings in the health, nutrition, and education of their children.
But despite these clear benefits, the pace of change remains far too slow. Saudi women fought for three decades before achieving a repeal of the driving ban. And even after this hard-won victory, the highly restrictive Saudi guardianship system will continue to prevent women from opening a bank account, starting certain businesses, obtaining a passport, or traveling abroad without the permission of a male relative—restrictions that are arguably more significant in limiting their full economic participation than the driving ban.
According to the World Bank, 90 percent of the world’s economies still have at least one law on the books that impedes women’s economic opportunities. And despite rapid improvements in women’s status in other areas—rates of maternal mortality have significantly declined over the last two decades, and the gender gap in primary school education virtually closed over the same time period—women’s labor-force participation has actually declined, from 52 percent to 50 percent globally between 1990 and 2016, in part because of the endurance of such legal restrictions.
HELPING WOMEN SUCCEED
Boosting the pace of change should be a priority for U.S. foreign policy—and in recent years, it has been. In 2009, the Obama administration appointed the first-ever U.S. ambassador for global women’s issues to lead U.S. efforts on this front. In 2011, the United States hosted the first-ever Asia-Pacific Economic Cooperation ministerial meeting on women in the economy, which led to historic commitments to promote women’s inclusion in the workplace, including through legal reform. And in 2014, the United States worked with G-20 leaders to set an ambitious target to increase female labor-force participation by 25 percent over the next decade, a goal that would add an estimated 100 million women to the global work force.
The Trump administration should sustain these initiatives and develop new policies that will economically enfranchise women throughout the world. Although the administration has been justifiably criticized for undermining women’s rights in health, education, and other areas, it has acknowledged the importance of women’s economic participation. In July, Washington put diplomatic and financial resources into the development of the Women Entrepreneurs Finance Initiative (We-Fi), a partnership with the World Bank and other countries that will leverage $1 billion in financing to improve women’s access to capital. (This program, which the White House has characterized as the brainchild of Ivanka Trump, in fact expands on a model spearheaded during the Obama administration called the Women Entrepreneurs Opportunity Facility, which continues today and similarly aims to help close the gender gap in access to credit.)
At the end of the day, women’s economic participation improves societies and drives growth.
But to truly generate returns on its investment in women’s entrepreneurship, the current administration must adopt a more comprehensive approach. Greater access to capital will go only so far if women remain legally prohibited from entering into business relationships or holding positions that are available to men. Indeed, some have criticized We-Fi for failing to take on the systemic legal barriers that impede women’s economic participation. Others have questioned the commitment of some of the partner states—including Russia, Saudi Arabia, and the United Arab Emirates—given the gender inequalities enshrined in their laws. Trump’s retreat from U.S. leadership on equality and human rights overseas has compounded these doubts. During his May 2017 trip to Saudi Arabia, Trump stated, “We are not here to tell other people how to live, what to do, who to be,” at a time when the driving ban, along with various other restrictions on women, remained in full effect. If the administration is serious about advancing women’s economic participation globally, it must tackle laws and policies that rig the game against women—and accept the mantle of global leadership, which Trump has spurned.
The United States should start by tying development assistance to progress on women’s economic participation, a strategy that would also uphold the administration’s commitment to efficient public spending. Some organizations already do this. For example, the Millennium Challenge Corporation, an aid agency funded by the U.S. government, evaluates the legal position of women in a given country when making decisions about whether to provide assistance, assessing factors including women’s ability to sign a contract, register a business, choose where to live, travel freely, serve as the head of a household, and obtain employment without permission. This policy has created “the MCC effect”: countries enacting legal reforms in order to attract U.S. aid. In 2006, during negotiations with the MCC, the Parliament of Lesotho ended the practice of giving women the legal status of minors. And in 2007, to secure MCC investment, the Mongolian government enacted property rights reforms that increased the percentage of female landowners and allowed for the collection sex-disaggregated data on land registration to establish a base line for monitoring future progress. The MCC model should be expanded to all U.S. foreign assistance programs to guarantee maximum returns on American investments in women’s economic development.
The United States should also encourage similar reforms within multilateral economic institutions. For example, Washington can use its leverage at the IMF to make equal treatment for women in an economy a precondition for obtaining investment and a positive assessment from the fund. The IMF is already running a pilot program that includes appraisals of legal equality in the process of reviewing conditions in 20 countries that receive IMF loans. It should extend that policy to all recipient countries, and this approach should become standard practice at other multilateral financial institutions as well, starting with regional and subregional development banks.
Finally, Washington should draw attention to the persistent legal barriers that continue to impede women’s economic opportunity and broader economic growth. The U.S. Treasury and State Departments could start by releasing an annual ranking of countries, modeled on the State Department’s Trafficking in Persons Report. This exercise would raise awareness and create competition, incentivizing country-level reforms.
To be sure, legal reforms are just one step on the road to gender parity in the global economy. After all, the reforms must be implemented in the cultural context that gave rise to pervasive discrimination in the first place. And promoting equality on paper will not necessarily improve the situation of women in practice. Genuine progress requires enforcement, which presents its own challenges.
Still, eliminating legal barriers to women’s economic participation is essential. Without these reforms, women cannot establish their right to compete in the marketplace. And research shows that legal reforms can precipitate broader societal changes, particularly when combined with community education initiatives. In Senegal, for example, a ban on female genital mutilation, coupled with an information campaign, caused the practice’s incidence to drop far more quickly than in comparable nations where it remained legal. By encouraging legal reforms and supporting grass-roots efforts to shift norms, the United States can meaningfully improve women’s economic participation.
In advancing this agenda, Washington should not heed the naysayers who claim that promoting gender equality constitutes cultural imperialism. Such assertions ignore the proliferation of domestic groups fighting for women’s inclusion around the world, including in Saudi Arabia, where women have been campaigning for the right to drive since 40 courageous women first staged a demonstration in the early 1990s. These critics also overlook the persuasive economic case for female inclusion, which is already galvanizing change across the globe.
At the end of the day, women’s economic participation improves societies and drives growth. Leveling the legal playing field is not just a matter of fairness; it is an economic imperative that countries around the world ignore at their own peril. The time has come for Washington to act—and to use its influence to push others to act, as well.