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3 Ways Sex-Based Discrimination Harms the Economy

Challenges to women’s economic participation in the economy exist not only in countries around the world, but also in the United States.

Photo Credit: U.S. Dept. of Commerce


The impact of women's entrepreneurship on the global economy cannot be underestimated. In 2010, 104 million women in 59 of the world's economies started and managed new business ventures, generating millions of jobs and contributing substantially to their domestic, as well as the world's, gross domestic product. Around the world when women start businesses, the ripple effects are tremendous -- they create jobs for others, build up household income, and invest accumulated savings back into the community in the form of health care, education, and food.

Despite these proven truths, barriers to women's economic empowerment still exist. On International Women's Day, let us take note of these challenges to women's economic participation not only in countries around the world but also in the United States. Given that women of color represent the fastest-growing segment of the women-owned business market here at home, it would be wise to consider how to unleash this population's economic potential for the sake of the entire country.

Global women's economic empowerment

The State Department's Economic Security and Empowerment programs seek to unlock what the agency calls a vital source of economic growth around the world: women. These programs range from assisting internally displaced Kenyan women in improving their small businesses with training in business skills and improving their access to micro-credit loans, to supporting the production of traditional Timorese women's woven art with training for production and quality control and providing wholesale and retail outlets for products within Timor-Leste and overseas.

In all of these programs, the goal is the same: Make sure that countries around the world appreciate the economic contribution and potential that women present to their economies and cooperate with reducing the barriers that still exist to women's full and unencumbered participation in the workforce.

Secretary of State Hillary Clinton outlined the significant benefits that we could expect from closing this gender work gap in her remarks at the Asian Pacific Economic Cooperation Women and the Economy Summit in September 2011:

  • Economic growth:McKinsey study found that a modest increase in women's overall share of labor in the United States -- women went from holding 37 percent of all jobs to nearly 48 percent over the past 40 years -- accounts for nearly one-quarter of the current GDP. A Goldman Sachsstudy shows that a reduction in barriers to female labor force participation would increase America's GDP by 9 percent, the Eurozone's GDP by 13 percent, and Japan's GDP by 16 percent. Narrowing the gender gap could also lead to a 14 percent rise in per-capita income by the year 2020 in China, Russia, Indonesia, the Philippines, Vietnam, and Korea.
  • Increased productivity: A World Bank study found that managers could significantly increase productivity per worker by 25 percent to 40 percent by eliminating discrimination against female workers and managers. Research also shows that companies with more women board directors outperform companies with the smallest number by 66 percent in return on invested capital, 53 percent in return on equity, and 42 percent in return on sales.
  • Stronger communities: Women around the world are known to invest first and foremost in their families and surrounding communities. Data shows that women are stronger savers than men, and with these savings, women invest in those around them. By spending more of their earned income on food, health care, and education for themselves and their families, women reinvest monies into their surrounding communities, multiplying the effect of their economic participation by creating more jobs and diversifying local economies.

Women are clearly engines of economic growth around the world. Denying women's workforce potential and entrepreneurship denies us all.

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