Journal Issue
Share
Article

Gender equality can foster growth and help reduce poverty

Author(s):
International Monetary Fund. External Relations Dept.
Published Date:
October 2003
Share
  • ShareShare
Show Summary Details

One does not normally see a connection between the IMF’s work and the pursuit of gender issues, Heller said. But a focus by the IMF on such issues in its work with countries on poverty reduction strategy papers (PRSPs) and programs under the Poverty Reduction and Growth Facility (PRGF) would promote the MDGs and also the IMF’s objectives for poverty reduction. Three of the eight MDGs are gender related—equality in primary and secondary education, full enrollment of girls in primary education, and improvements in maternal health.

But even a focus on the MDGs that are not gender specific would require that policies be tailored to disproportionately benefit girls and women because, at present, they suffer disproportionately from poverty and unhealthful environmental conditions, as well as the direct and indirect effects of the HIV/AIDS epidemic. In several countries, girls have lower life expectancy and are more poorly nourished than their male counterparts.

Equally important, achieving these gender-related MDGs may have independent instrumental effects in fostering economic growth. Raising the level of women’s education and improving their health and income status may lead to lower fertility rates and higher labor productivity. Achieving universal secondary education is particularly critical. While a primary education may have positive benefits for the next generation, only a secondary education seems to benefit women. World Bank estimates suggest that an increase of 1 percentage point in the share of women with a secondary education is associated with an increase in per capita income of 0.3 percentage point.

Should the IMF influence countries’ decisions about the policy goals, such as gender equality, that guide their poverty reduction strategies? Heller argued that a key advantage of focusing on the MDGs is that they have been endorsed by virtually all countries in the context of the Monterrey Consensus. It is thus legitimate for the IMF and the World Bank to advocate the MDGs as the basis for countries’ PRSPs and for the MDGs to shape a country’s policies in the context of a PRGF-supported program.

IMF role in realizing the MDGs

According to Heller, much of what the IMF does already supports achievement of the MDGs. IMF-supported programs in countries experiencing balance of payments crises are vital in restoring sustainable growth, which, in turn, is a precondition for poverty reduction. IMF surveillance facilitates global economic growth, which is necessary to support growth in the poorest countries. Also, in the surveillance context, he said, the IMF seeks to prevent financial crises, whose effects normally fall disproportionately on the poor, with long-lasting effects on human capital formation. This preventive role may be the most important one for women, who are often most susceptible to the adverse effects of a financial crisis.

The IMF, in collaboration with the World Bank, provides technical assistance on budget systems to ensure that increased social spending reaches the intended recipients. The IMF also has been involved in efforts to promote debt relief for poor countries and to channel the resulting budgetary savings to poverty-reducing programs. Finally, Heller said, in its research efforts, the IMF analyzes such issues as the macroeconomic impact of HIV/AIDS and the design of social safety nets.

But, Heller argued, the IMF could do more to further the achievement of the MDGs. First, it could more forcefully emphasize the importance of countries’ including policies that favor women and girls in their PRSPs. Second, a gender focus could be valuable in shaping the IMF’s views on macroeconomic policy, although he acknowledged that IMF economists needed to strengthen their understanding of these issues. He cited a number of facts that should motivate IMF economists’ work in this sphere:

• The poorer the country, the more official GDP figures underestimate women’s contribution to countries’ economic performance, given their greater relative importance in both the informal sector and in nonmarket activities; a failure to model the nonmarket sector of the economy can result in distortions in both analysis and operational policy conclusions. Maternal health and nutrition also bear on the health of children and thus on the quality of the capital endowed to the next generation. Women’s time allocation to market activities may be affected by government policy decisions that influence the costs associated with necessary nonmarket activities (for example, investment in infrastructure on water or roads).

• Economic assessments of the impact of price or interest rate liberalization on production may benefit from taking gender considerations into account. Women often have little decision-making power within the family, little control over the use of household income, and little access or ownership rights to assets. This may affect the extent to which they respond, in their production and investment decisions, to improved market incentives.

• Assessments of the impact of economic shocks may also be biased to the extent that gender factors are not taken into account. Women may be excessively exposed to the effects of commodity price shocks or negative trends in the terms of trade in primary commodities. Because women are overrepresented in export-oriented industries, they may be more vulnerable to external shocks than their male counterparts. Women represent 80 percent of the two million workers employed in export processing zones in some 50 countries.

• The Asian financial crisis illustrated women’s greater vulnerability to crises. They are more likely to be laid off or displaced by temporary workers or male workers. They may be forced into the informal sector at lower rates of pay. Girls may be forced to drop out of school to share the responsibilities of income generation and nonmarket activities. Women’s nonmarket activities may become more burdensome, as more time is required to find low-cost foods, fuel, and water and to prepare meals. Women also often act as the de facto safety net in societies where formal social safety nets are not in place or are poorly developed.

• The adverse effects of a crisis may also be exacerbated if governments, seeking to strengthen their fiscal position, cut back on social services—in education and health—from which women would normally disproportionately benefit. Higher charges may be imposed for tuition and health services, forcing more young girls to drop out of school and reducing their access to services. The disproportionately adverse effects on girls and women may have longer-term consequences than might be immediately apparent.

• Trade liberalization may affect men and women in different ways—there is evidence in developing countries that greater trade openness is associated with a larger number of women in paying jobs.

• Gender inequality plays an important role in the spread of HIV/AIDS, which has had significant macroeconomic implications in affected countries.

Would a gender perspective influence the IMF’s choice of macroeconomic policies? Modeling of the nonmarket economy might result in a different policy set or at least an awareness of the need for supplementary measures to offset particularly adverse effects on productivity or output. A gender focus would influence the choice of the expenditure or revenue instruments used to consolidate the fiscal position. Policy choices on social safety nets would also be influenced.

The third way the IMF can promote the MDGs, Heller argued, is by exploring the role of a gender-focused perspective on government budgets. This “would allow for greater analysis of the incidence of government expenditures and revenues by gender and help governments decide where policies need to be adjusted and resources reallocated to promote gender equality.” It would also provide a way to hold governments accountable for their commitments to gender equality.

Network of women ministers to be created

On September 20, attendees at the meeting of High-Level Women in International Finance, Economics, and Development voted to create a formal worldwide network of women ministers of finance and economic development, related ministerial portfolios, and other women leaders in the field. “As the only organization of its kind, the network will enable all women ministers of these portfolios to meet, build alliances, and work together to promote agreed-upon directions and policies,” said the Right Honorable Kim Campbell, former Prime Minister of Canada and Chair of the Council of Women World Leaders, who directed discussions on the network’s creation. IMF Managing Director Horst Köhler opened the meeting, expressing support for its objectives, especially as they lead to a more balanced order by strengthening the leadership and inclusion of women.

The network will be cochaired by the Honorable Susan Whelan, Minister of International Cooperation of Canada, and the Honorable Luisa Diogo, Minister of Planning and Finance of Mozambique. According to Whelan, the network will be a vehicle for its members “to go beyond talking to action.”

The mission of the Council of Women World Leaders, founded in 1996, is to promote good governance and enhance the experience of democracy globally by increasing the number, effectiveness, and visibility of women who lead at the highest levels in their countries. As such, the Council of Women Leaders is uniquely positioned to direct the formation of the network of finance ministers. In June 2002, the Council launched the International Assembly of Women Ministers, whose 500 members are all sitting ministers. This Assembly will direct the network and its activities and provide a forum for women at the ministerial level, from a wide range of portfolios to discuss their challenges and priorities.

Fourth, he said, the IMF and the World Bank should collaborate to ensure that social safety nets are appropriately directed toward girls and women during economic crises and reform programs. Adolescent girls, in particular, are extremely vulnerable (to AIDS, sexual assault, and pregnancy) and yet receive few services. In some instances, safety nets designed for women seem to be efficient. The increased emphasis on Poverty and Social Impact Analyses (PSIAs) also offers the prospect of a more acute diagnosis of the gender impact of alternative macroeconomic policy instruments.

But the IMF has limitations

Even as Heller explained that the IMF could do more to promote the gender-related MDGS, he noted that its mandate and core areas of expertise in the macro-economic sphere leave little scope for detailed micro-economic and sectoral policy analyses. Thus, it is in partnership with country authorities and other development partners that the IMF can make the most progress in pursuing the gender-related MDGs.

The speech was written by Peter Heller and Erik Lueth, (Economist in the IMF’s Fiscal Affairs Department). The full text of the speech is available on the IMF website (at www.imf.org).

Other Resources Citing This Publication