Educated women contribute to the quality, size, and productivity of the workforce. In a world fraught with war and poverty, hunger and disease, education is one of the few “silver bullets” that can contribute to meaningful improvements in people’s lives in most of these areas…
For those in certain regions of the world who haven’t been paying attention, please take note: Educating women is good for the economy. Recent reports from the World Bank, World Economic Forum, and the OECD point to the key economic role played by women as they become more productive citizens through education. As chief Japan strategist and co-head of Asia economics, commodities, and strategy research for Goldman Sachs (GS), I have been studying “womenomics” since 1999. The benefits to societies and economies have become obvious. Educated women contribute to the quality, size, and productivity of the workforce. They can get better paying jobs, allowing them to provide daily necessities, health care, and education to support the family.
Our research shows that investments in female education can yield a “growth premium” in GDP trends and that narrowing the gender gap in employment can boost per capita income. Educated women are better at managing their own and their family’s health issues, thereby reducing infant and maternal mortality, as well as health-care costs, and improving demographic structures. In a world fraught with war and poverty, hunger and disease, education is one of the few “silver bullets” that can contribute to meaningful improvements in people’s lives in most of these areas. The evidence is clear. Case closed.
So why are girls and women in many societies still having to fight to get through secondary and tertiary education? Why is the gender gap in access to learning as well as to the workplace still so very wide? As co-chair of the Asian University for Women’s Support Group in Japan since 2005, I have a ringside view into some of the hurdles faced by young women in developed as well as developing Asia. These hurdles can be rooted in culture, history, or legacy, as well as poverty; they are unique to each society and community. The only way to get people to change their mores and customs is by getting them to see the benefits.
They would see those benefits at the AUW in Chittagong, Bangladesh. Those lucky enough to attend or visit the university are changed by the experience. Thanks to corporate and private philanthropy, as well as tuitions and some national and international aid, the AUW has managed to build a world-class university from scratch in a poor region in a developing country, recruiting talented faculty and 541 bright students from a dozen nations. That the pioneering class of 138 students will graduate this May is already an amazing accomplishment. Based on their caliber and motivation, it’s clear the graduates will go on to become leaders in their communities and countries.
In Japan, 70 per cent of working women stop working after the birth of their first child. If the country’s female employment rate matched that of males (80 per cent), the workforce would gain 8.2 million employees and Japan’s GDP could be boosted by up to 15 per cent. Japan is lagging in growth because it is running a marathon with one leg. It must start tapping its most underutilised resource: women.
Many developing countries in South Asia are similarly handicapped, as girls and women are denied access to education and relegated to unskilled, low-paying jobs. In addition to reducing their chances for a better life, their lack of education costs their country in terms of lost economic growth. We estimate that for the BRICs (Brazil, Russia, India, China) and Next-11 countries (Bangladesh, Egypt, Indonesia, Iran, Korea, Mexico, Nigeria, Pakistan, Philippines, Turkey, Vietnam), greater investments in female education could yield a “growth premium” that raises GDP growth by about 0.2 per cent per year. Moreover, narrowing the employment gender gap could raise income per capita 20 per cent higher than our baseline projections by 2030.
In recent years, corporations have moved into emerging markets to benefit from their fast-growing economies. It is time to think about making that growth more sustainable and more broadly distributed. As with global warming, companies cannot always just take; they must also give back and help improve the situation. Based on the macroeconomic evidence, it is in a company’s interest to support education for women in areas where it is currently lacking and to reduce the gender gap. That is how the sustainable growth of the next generation of emerging markets will be nurtured.
Kathy Matsui is Managing Director, Chief Japan Strategist and Co-head of Asia Economics, Commodities and Strategy Research at Goldman Sachs.
Can The Brics Have Their Own World Bank?
Should the five Brazil, Russia, India, China, and South Africa create their own development bank and crisis fund?
The five countries known as the BRICS have 43 per cent of the world’s population, $4.4 trillion in currency reserves, and generally healthier economic growth than Europe and the U.S. Yet to their frustration, Americans and Europeans still dominate policymaking at the World Bank and the International Monetary Fund.
Should the five Brazil, Russia, India, China, and South Africa create their own development bank and crisis fund? BRICS leaders, concluding a summit meeting in Durban, South Africa, recently pronounced the idea “feasible and viable.” They also made clear, however, that it won’t happen soon, as they failed to reach agreement on how such institutions would be financed and governed. That’s hardly surprising. Despite their monolithic-sounding name, the BRICS don’t have much in common with each other. China’s economy is by far the largest of the five, totaling roughly the annual output of the others. China is the world’s largest exporter; India struggles with a growing trade deficit. The countries’ economic-management policies run the gamut from strong State control to largely free market.
True, the BRICS have impressive financial firepower, especially China, which accounts for $3.3 trillion of the total $4.4 trillion in currency reserves. But, asks Charles Robertson, an emerging-markets economist at Renaissance Capital in London, “in reality, does China or Russia want to see their currency reserves bailing out unsustainable macroeconomic policies,” as the IMF is regularly asked to do? Moreover, Robertson says, it would take years for a BRICS version of the IMF to “create a staff of economists and experienced professionals” who could manage such bailouts. Nor is it clear what role a BRICS development bank would play, alongside existing institutions such as the World Bank, the African Development Bank, the Asian Development Bank, and the Inter-American Development Bank. One possibility, Robertson says, would be for such a bank to foster mutually beneficial investments among the BRICS themselves. For example, it could finance pipelines to bring Russian gas to China or pay for infrastructure projects in Brazil that would be built by Chinese construction companies. But the idea that the BRICS can quickly build a counterweight to the World Bank and IMF is “naïve,” says Martyn Davies, chief executive of Frontier-Advisory, an emerging-markets research group in Johannesburg. Unlike the Western nations that agreed to set up the World Bank and the IMF after World War II, the BRICS “have no common ideology,” he says. “The glue that’s required is not there.”