## TRADE DRIVES

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GENDER EQUALITY &  
DEVELOPMENT

### How trade affects women
- Trade can significantly boost women’s role in the economy, reduce inequality, and expand women’s access to skills and education.
- Exporters employ more women:
  - In developing economies, women make up 33 percent of the workforce of exporting firms, compared with 24 percent of non-exporting firms.
  - Businesses that are part of global value chains or have foreign investors employ on average 11 to 12 percent more women compared with other firms.
- Trade increases women’s wages and can help reduce economic inequality:
  - Doubling the value of exports in a country’s manufacturing sector would increase the average female wage share from 24 to roughly 30 percent.
  - In a World Bank analysis of the African Continental Free Trade Area, models suggest that by 2035, wages for skilled and unskilled female labor could be 4 percent and 3.7 percent higher (relative to baseline), compared with a 3.2 percent increase for male workers at all skill levels.
- Trade creates better jobs for women:
  - 13 percent of women in highly integrated sectors work informally, compared with 20 percent in less integrated sectors.
  - For men, the probability of working informally falls from 9.5 percent in less integrated sectors to 5.0 percent in highly integrated sectors.
- Trade openness can increase women’s incomes and consumption:
  - Eliminating import tariffs raises the average real income for female-headed households compared with male-headed households in more than three-quarters of the 54 developing economies analyzed.
  - On average, real income gains reaped by removing import tariffs would be 2.5 percent greater for households headed by women than for those headed by men.
  - In countries such as Burkina Faso and Cameroon, this increase is equivalent to one year’s spending on education or health.

### Trade’s benefits and emerging opportunities
- Three global trends expand opportunities for women:
  - Expanding trade in services: services employ a larger share of women than agriculture and manufacturing; services trade is expanding faster than goods trade.
  - Growth of global value chains: better connect female-run micro and small businesses and small-scale farmers to international markets; women in global value chains have a 10 percentage point higher probability of being in the formal workforce than women in sectors not highly integrated.
  - Rise of digital trade: digital technologies help overcome constraints such as limited access to finance, education, mobility, and flexibility; digital platforms have seen a sharp rise in women-owned companies (example cited: about half of the entrepreneurs on Alibaba platforms are women, compared with a quarter among all entrepreneurs in China).
- Services labor force trend:
  - According to ILO statistics, in 2000, 46 percent of all services sector workers were women, rising to about 58 percent by 2020.

### Barriers and distributional concerns
- Sectoral tariff bias against female-intensive activities:
  - Sectors that are female-intensive—such as food and beverages, and textiles and apparel—on average face higher tariffs on inputs (referred to as “pink tariff”).
  - In India, this “pink tariff” amounts to 6 percentage points.
- Nontariff measures and fixed trading costs disproportionately affect small and medium enterprises, often women-owned, because:
  - They represent fixed costs of trading.
  - Small exporters lack specialized teams to manage trading processes and are more exposed to cumbersome administrative procedures.
  - Other barriers include limited access to trade financing and higher exposure to extortion and physical harassment at the border.
- Increased competition from trade reduces the ability to discriminate, narrowing the wage gap and improving working conditions for women.

### Policy recommendations (rebalancing policies)
- Adjust tariff policies that stack the deck against women (address “pink tariffs”).
- Pursue trade facilitation to streamline regulatory requirements for goods to cross the border.
- Advance international cooperation in key areas to promote gender equality without explicitly targeting women.
- Implement complementary policies to improve:
  - Access to education.
  - Access to financial resources.
  - Access to digital technologies and information.
- Design policies to be well coordinated and complementary to address specific barriers women face (for example, time constraints and limited geographic mobility due to family responsibilities).
- Deploy labor market policies to help women acquire new skills or relocate as comparative advantages shift; such policies require additional studies on trade’s impact on women, which in turn require more gender-disaggregated data.

### Pandemic, geopolitical tensions, and risks to progress
- Pandemic impact (2020):
  - The pandemic destroyed 4.2 percent of women’s employment worldwide (a drop of 54 million jobs), compared with 3 percent for men (a drop of 60 million jobs).
  - Women lost $800 billion in income; this figure does not account for wages lost in informal jobs, where women tend to be overrepresented.
  - The pandemic disproportionately affected sectors that tend to employ more women and increased caregiving burdens due to childcare center and school closures.
  - Teleworking and increased investment in digital technologies have given women more opportunities to benefit from trade going forward.
- Geopolitical risks:
  - The recent rise in protectionist pressures, global value chain reshaping, and geopolitical tensions—including the war in Ukraine—threaten to reverse gains in gender equality.
  - Open trade will be essential to designing a gender-inclusive economic recovery.

_Article by Nadia Rocha and Roberta Piermartini, Finance & Development, June 2023._

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_Source: https://www.imf.org/-/media/files/publications/fandd/article/2023/june/rocha.pdf_