Trading Places: Investing in the right policies can boost women’s representation in trade

Advancing women’s economic empowerment will require policy action across a wide range of areas, including increasing their participation in international trade, explains Jane Korinek, OECD trade & gender expert. // Banner: Shutterstock/tonkid
Trading Places: Investing in the right policies can boost women’s representation in trade
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Each year on 8 March, women are celebrated around the world. However, substantial gender gaps persist: women are paid less than men for equal work in every country; women are less represented in parliaments and on most corporate boards; and women systemically do more unpaid work than men. Women are also less represented in trade. Closing gender gaps makes good economic sense. A study by McKinsey estimated that achieving equality in economic opportunities for women and men could augment world GDP by USD 28 trillion in ten years—about the equivalent of the size of the Chinese and United States economies combined. But at the present rate of change, achieving global economic gender parity will take 132 years. Advancing the aim of women’s economic empowerment will require policy action across a wide range of areas, including increasing their participation in international trade.

Trade impacts women and men differently in their roles as workers, business leaders and consumers. Trade-related jobs in OECD countries are better paid and higher skilled; however, women are less likely to work in jobs that are directly engaged in trade. This is partly because women tend to work more in services, which are less traded than goods. Even within services, women work in less-traded industries such as health, education and public administration. Moreover, there is evidence in some countries that gender wage gaps are bigger in better-paying jobs engaged in trade, so even when women do work in them, they benefit less from their higher wages.

Similarly, businesses owned and led by women trade less, thereby benefiting less from the economies of scale and productivity gains associated with exporting and the lower prices for inputs into their production processes that come from importing. Women-led firms trade less in part because they tend to be smaller whereas larger firms trade more, and they are more likely to produce services that are less traded (Figure 1). But a substantial part of the gender export gap cannot be explained by firm characteristics, and instead seems to be associated with underlying factors related to gender differences. This suggests a potential role for policy in better supporting women in trade.

Figure 1. Gender export gaps in online firms

Percentage of firms exporting, March 2022

Note: Based on a sample of 10,000 businesses with a Facebook page from 34 OECD countries. The differences in firm characteristics driving export gaps are disentangled using a Kitagawa-Oaxaca-Blinder decomposition, a statistical approach often used to analyse gender pay gaps. (See Jann, B. (2008) The Blinder–Oaxaca decomposition for linear regression models. The Stata Journal, 8(4), 453-479).
Source: Authors’ calculations based on the OECD-World Bank-Meta Future of Business Survey undertaken in March 2022.

Trade lowers prices and increases consumers’ purchasing power. Lower income households—in which women are disproportionately represented—benefit even more from lower prices than higher income households because a greater share of their disposable income is spent, including on traded consumer goods. Lowering barriers to trade decreases prices and increases the variety of products available to households, particularly benefiting lower-income consumers where women predominate.

If countries assess the impacts of a potential trade agreement in the early stages of negotiations, they can use the information they have gleaned to prioritise the goods and services that women produce and consume for greater market access.

Although trade policies are not de jure discriminatory, they impact women and men differently due to dissimilar initial conditions. Trade and other policies can help lower barriers to trade faced by women, to increase their likelihood of reaping its benefits and contribute to closing gender gaps.

One policy area that can support greater inclusivity is applying a gender lens to trade agreements. When countries negotiate trade agreements, they lower trade barriers in goods and services. This in turn lowers prices which particularly benefits more vulnerable groups, where women are disproportionately represented. Lower trade barriers in partner countries lowers trade costs for exporters. If countries assess the impacts of a potential trade agreement in the early stages of negotiations, they can use the information they have gleaned to prioritise the goods and services that women produce and consume for greater market access.

Read more on the Forum Network: Why measuring the distance between the perception and reality of gender equality is needed by Nadia Caïd-Holzer, Scientific Director, Women’s Forum, Publicis Groupe

For the past three decades, actors across the public, private and NGO sectors have launched numerous measures to advance gender equality. And yet despite the various methodologies, scopes and intents, their work remains insufficient, argues Nadia Caïd-Holzer.

Trade facilitation reforms, such as increasing transparency and reducing burdensome customs procedures, reduce barriers to trade and lower trade costs for all businesses, but they especially impact smaller firms. Since women-led firms tend to be smaller than men-owned ones, lowering the fixed costs of exporting particularly increases their propensity to trade.

Trade promotion agencies support exporters and potential exporters with information and trade promotion services, and by organising trade missions. Export promotion agencies in some countries have been more intentional about engaging with women business leaders by seeking them out through their professional networks. Some export promotion agencies lower the capital or size categories of the firms they support in the case of women-led or minority-led firms.

The COVID-19 pandemic brought to light the importance of e-commerce and online access to customers, suppliers and information. Digitalisation can help level the playing field by enabling greater access to international markets, including in services sectors where women are more active. Since women-led firms are less well financed, ensuring access to high-speed internet is key to supporting their engagement with international markets.

Women-led firms trade less in part because they tend to be smaller. One of the barriers to increasing the size of women-led firms is that they have less access to credit and equity. Lowering barriers to finance for women entrepreneurs and business leaders—including trade finance—can help them grow their businesses, including internationally. Some countries have put financing mechanisms into place, including export financing that caters specifically to women by offering smaller loans and more flexible collateral requirements.

Better representation of women at all levels of policymaking, and diverse trade negotiating teams, can help advance the objective of closing gender gaps.

If policymakers aim to support women in trade, it is best to consult women themselves through professional organisations and those focusing on promoting gender equality; only then can they better understand the challenges women face and the support they require. Better representation of women at all levels of policymaking, and diverse trade negotiating teams, can help advance the objective of closing gender gaps.

Finally, trade is only one element of the policy mix necessary to support women in international trade. Complementary domestic policies that favour and remunerate women’s participation in labour markets are equally important, if not more so. Domestic policies that serve to share the burden of unpaid work; close gender wage gaps; promote women in leadership; close gaps in access to finance; encourage women and girls in STEM studies and professions; and support women-owned and women-led firms in government procurement are some of the main policy areas that increase women’s ability to lead and expand businesses, including internationally.






Read OECD's report on Trade and Gender

Read OECD's report on Trade and Gender

Check out also OECD's statistics on Income Inequality

 

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Go to the profile of George Toyin Roberts
7 months ago

I agree with you on this, too much hypocrisy is on display and you will find it easily in sports and politics. People often complain about this issue but act differently when it is time to act.