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Gender Equality & Trade Policy

Gender Equality and Trade Policy
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III. Gender Perspectives in Trade Policy

The impact of trade policy on women’s economic empowerment and well-being

The effect of trade policy on economic and social activities tend to be different between men and women as they have different economic and social roles and different access to and control over resources, due to socio-cultural, political and economic factors. Women tend to be more affected by the negative side-effects of trade liberalization and are facing bigger challenges than men when it comes to taking advantage of the opportunities trade offers. This situation is due to gender biases in education and training, gender inequalities in the distribution of income and command over resources, as well as unequal access to productive inputs such as credit, land, and technology, which translate into significant gender differences in occupational distribution. (see note 7)

Pre-existing gender imbalances at the macro, meso and micro levels determine the differential impact of trade on women and men, girls and boys. Such impacts can be best considered at the following levels of analysis: (a) the sector level, in which trade can augment or reduce employment and income opportunities for women, depending on whether the sectors where women work, expand or contract as a result of trade liberalization and import competition (see section IV below); (b) the governmental level, where fiscal revenues and public expenditures - modified by trade liberalization in accordance to the relative importance of tariff revenues in government financing - have an impact on public investments in social infrastructure and services that particularly benefit women, such as health, education, electricity, water, sanitation and other infrastructure to meet household needs; and (c) the household level, where expenditures may decrease or expand according to the effects of trade on consumer goods prices. (see note 8)

For example, trade liberalization may benefit poor consumers, including women in their role as family providers and caregivers, if price reductions (through the dismantling or the reduction of tariffs) affect imported products that represent a relevant part of the household consumption basket.(see note 9) On the other hand, trade liberalization can disrupt economic sectors and markets where women are active, depriving them of employment opportunities and pushing them towards the informal sector. Trade liberalization increases international competition. While this may bring more opportunities for individuals and firms, it also implies the need to grow and upgrade technologically, which may be particularly challenging for women employees and women-run enterprises with limited access to marketing networks, credit and technical knowledge.(see note 10) Trade-related changes in employment, taxation, public provision and consumption may in turn have important consequences for the gender-related distribution of paid and unpaid work among household members, including children.(see note 11)

The impact of gender inequalities on trade performance and economic growth

While men and women are affected differently by trade policies, gender inequalities, in turn, impact on trade policy outcomes and economic growth.

One fundamental way in which gender equality can have a sustained positive impact on economic growth is through greater accumulation of human capital of women and girls –a crucial factor for the development of national productive capacity. Recent evidence on the links between girls' improved education and economic growth has shown that enhanced gender equality increases the level of investments in a country. A more productive workforce, through greater gender equality in employment and education, increases the rates of return on investments and attracts more investors. In addition, the cases in which girls’ education had the greatest impact on growth were in areas where (i) employment opportunities were readily available for women; (ii) countries had a sizeable export-focused manufacturing sector; and (iii) their economies had already reached the middle-income status. (see note 12)

Although equality in education and employment opportunities have a positive impact on a country's long-term growth, these benefits may negated by the industrial strategies of a number of semi-industrialized countries that have focused their export strategy on labour-intensive goods produced by predominantly cheap female workforces, taking advantage of gender wage inequalities. While such a strategy stimulated profits, investment and exports in the short run, it is counter-productive on the longer run. (see note 13)

There is conclusive evidence that economic development and social equality tend to go together.(see note 14) Studies on the determinants of economic growth suggest that societies where income inequality and gender discrimination are lower tend to grow faster.(see note 15) There seems to be a strong correlation between gender equality (measured by economic participation, education, health and political empowerment), competitiveness and GDP per capita.(see note 16)

Gender-responsive trade policies

Recent experiences in trade liberalization and their impacts on gender equality thus make a strong case for the need to incorporate gender perspectives into overall trade policy design and implementation. Incorporating (mainstreaming) gender considerations in trade policy means assessing the impacts of such policy on the wellbeing of men and women, evaluating how trade policies affect gender relations, for example by widening or closing the gender wage gap, and formulating and implementing trade policy in a gender-sensitive manner. This is done with a view to: (i) better understanding the specific challenges and opportunities that women and men face from trade policy; (ii) designing and implementing trade and other macro-economic policies to maximize opportunities for all; (iii) facilitating the successful integration of women into more technologically advanced and dynamic sectors of the economy; (iv) avoiding the increase of gender disparities and mitigating the existing; and (v) facilitating women's empowerment and well-being. (see note 17)

Different policy measures in trade and other areas of economics provide specific entry points to mainstream gender issues in international trade. Specific instruments include: (a) trade liberalization agreements; (b) unilateral liberalization – for example, unilateral reduction of tariffs on intermediate inputs in productive sectors with high female employment; (c) tax incentives - for example to encourage exports from women-owned enterprises;(see note 18) (d) multilateral development assistance frameworks, such as Aid for Trade (AfT), the United Nations Development Assistance Framework (UNDAF), and the Enhanced Integrated Framework (EIF) for the Least Developed Countries (LDCs) (see section VIII).

As trade policies interact and are mutually affected by many other domestic policies and international factors, there is a need for overall coherence in order to achieve development goals. For this to happen, several coordinated and gender-sensitive policies are needed in areas such as fiscal policies, education, labor, training, innovation, financing, to mention a few.


7 UNCTAD (2009). Mainstreaming gender in trade policy. Note by the UNCTAD secretariat. TD/B/C.I/EM.2/2/Rev.1, http://www.unctad.org/en/docs/ciem2d2_en.pdf

8 Fontana M (2009). Implications of Current Trade Policies For Gender Equality, Paper prepared for the Expert Group Meeting on The impact of the implementation of the Beijing Declaration and Platform for Action on the achievement of the Millennium Development Goals, United Nations Office at Geneva, 11-13 November 2009, http://www.un.org/womenwatch/daw/egm/impact_bdpfa/EP9%20-%20FontanaREV.pdf

9 Fontana M. (2009a). Gender Justice in Trade Policy - The gender effects of Economic Partnership Agreements, One World Action.

10 UNCTAD (2009). Op. cit.

11 Fontana M (2009), Op. cit

12 Chatham House and Vivideconomics (2010). Evidence for Action: Gender equality and economic growth, http://www.chathamhouse.org.uk/files/17416_0910gender.pdf

13 The Republic of Korea provides a clear example of the role of gender inequality in stimulating export and growth. In the early 1970s, women’s wages in the Republic of Korea were less than half of those of men. Low wages played a pivotal role in holding down costs of production in labor-intensive manufacturing export industries, especially garments and electronics. The foreign exchange that exports generated was funneled into the purchase of capital-intensive goods and imported technology, helping to build capacity in industries such as automobiles, semi-conductors, steel, and shipbuilding. Thus, women’s labor helped to resolve the balance of payments constraint to growth that many developing countries faced by generating the foreign exchange to finance much needed imports. Source: Seguini S , G. Berik and Y. Rodgers, Promoting Gender Equality as a Means to Finance Development, Working Paper No: 2009-10, September 2009, University of Utah, Department of Economics.

14 ECLAC notes that "In the long term there is a virtuous circle between the narrowing of social divides, the closing of productivity gaps and more dynamic and sustained growth. There is conclusive evidence that economic development and social equality tend to go together. It suffices to contrast the distribution of income and other assets in poorer and less poor societies." Source: ECLAC (2010). Time for Equality: Closing Gaps, Opening Trails, http://www.eclac.cl/publicaciones/xml/1/39711/100604_2010-115-SES-33-3-Time_for_equality_doc_completo.pdf

15 Alesina A and D. Rodrick D (1994). "Distributive politics and economic growth". The Quarterly Journal of Economics. MIT Press. Vol. 109(2): 465–490, http://links.jstor.org/sici?sici=0033-5533%28199405%29109%3A2%3C465%3ADPAEG%3E2.0.CO%3B2-N&origin=repec&

16 World Economic Forum, The Global Gender Gap Report, 2010, http://www.weforum.org/pdf/gendergap/report2010.pdf

17 UNCTAD (2009). Op. cit.

18 UNCTAD (2008). Moving towards Gender Sensitization of Trade Policy. UNCTAD/DITC/TNCD/2008/2, http://www.unctad.org/sections/ditc_dir/docs/ditctncd20082_en.pdf.

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