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Romina Kazandjian, Ms. Lisa L Kolovich, Ms. Kalpana Kochhar, and Ms. Monique Newiak
We show that gender inequality decreases the variety of goods countries produce and export, in particular in low-income and developing countries. We argue that this happens through at least two channels: first, gender gaps in opportunity, such as lower educational enrollment rates for girls than for boys, harm diversification by constraining the potential pool of human capital available in an economy. Second, gender gaps in the labor market impede the development of new ideas by decreasing the efficiency of the labor force. Our empirical estimates support these hypotheses, providing evidence that gender-friendly policies could help countries diversify their economies.
Aidar Abdychev, La-Bhus Fah Jirasavetakul, Mr. Andrew W Jonelis, Mr. Lamin Y Leigh, Ashwin Moheeput, Friska Parulian, Ara Stepanyan, and Albert Touna Mama
Many small middle-income countries (SMICs) in sub-Saharan Africa (SSA) have experienced a moderation in growth in recent years. Although factor accumulation, most notably capital deepening, was crucial to the success of many SMICs historically, this growth model appears to have run its course. The analysis in this paper suggests that the decline in the contribution of total factor productivity (TFP) to growth is largely responsible for the slowdown in trend growth in many SMICs, which highlights the need for policy actions to reinvigorate productivity growth. This paper explores the question of what kind of structural policies could boost productivity growth in SMICs and the political economy factors that may be contributing to the slow implementation of these critical reforms in these countries. The findings suggest that although macroeconomic stability and trade openness are necessary for productivity growth, they are not sufficient. SMICs need to improve the quality of their public spending, most notably in education to minimize the skill mismatch in the labor market, reduce the regulatory burden on firms, improve access to finance by small and medium-sized enterprises and create the enabling environment to facilitate structural transformation in these economies.
International Monetary Fund

This Poverty Reduction Strategy Paper for the Kingdom of Lesotho presents a determined plan in pursuance of high and sustainable equity-based economic growth. It contains medium-term objectives and strategies to address the major challenges facing the country. These challenges include employment creation and income generation, and improving quality of and access to education and health services. Lesotho plans to deal boldly with its trading and investment partners by exploiting the opportunities inherent in the process of globalization under such mechanisms as the Africa Growth and Opportunities Act.

International Monetary Fund. African Dept.

1. Gender inequalities in opportunities and outcomes persist in Lesotho and the growth potential from closing the gender gaps is sizable. Gender-based legal restrictions, as well as barriers in access to education, healthcare, financial services, assets, the labor market, and formalsector employment prevent women from fully and equally participating in the economy. This in turn lowers aggregate productivity and hampers the efficient allocation of talent and resources, thereby weighing down on economic growth. Eliminating gender inequality is thus macro-critical — it can boost productivity and help countries fulfill their growth potential, while enhancing economic stability and resilience.2 A 2015 study suggests that closing the gender gap of Lesotho with the ASEAN-5 countries could boost economic growth by 0.5 percentage point, which is comparable to cutting income inequality, and greater than the impact of improving infrastructure. To quantify, we selected a subgroup of ASEAN-5 countries with a strong track record of growth as the benchmark and decomposed the differences in average real GDP per capita growth between Lesotho and these fast-growing countries to determine the role that different factors play in explaining Lesotho’s growth shortfall (Figure 1).3