Trade Drives Gender Equality and Development
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- Authors: NADIA ROCHA, ROBERTA PIERMARTINI
- Published: June 1, 2023
Framing and motivation
- Gender equality is both a fundamental right and an economic imperative; reducing gender gaps yields larger gains in developing economies because levels of inequality are higher and potential rewards from closing gaps are greater.
- International trade is positioned as a promising policy lever to boost women’s economic participation, reduce inequality, and expand access to skills and education.
- Research progress has been constrained by a dearth of sex-disaggregated data on consumption, occupations, and sectoral employment; the World Bank–WTO report "Women and Trade" seeks to address this gap and provide a framework for analysis.
How trade affects women — empirical findings
- Exporters employ more women:
- In developing economies, women comprise 33 percent of the workforce of exporting firms versus 24 percent in non-exporting firms.
- Firms in global value chains or with foreign investors employ on average 11 to 12 percent more women compared with other firms.
- Trade raises women’s wages and can 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.
- World Bank models on the African Continental Free Trade Area 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 and formalization advantages for women:
- 13 percent of women in highly integrated sectors work informally, compared with 20 percent in less integrated sectors.
- For men, informality falls from 9.5 percent in less integrated sectors to 5.0 percent in highly integrated sectors.
- Trade openness increases women’s incomes and consumption:
- Eliminating import tariffs raises 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 from 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.
Global trends expanding opportunities for women
- Expansion of services:
- Services employ a larger share of women than agriculture and manufacturing.
- Services trade is expanding faster than goods trade; services now create the most jobs and do so earlier in development.
- International Labour Organization statistics: in 2000, 46 percent of all services sector workers were women, rising to about 58 percent by 2020.
- Global value chains (GVCs):
- GVCs create better jobs and connectivity for female-run micro and small businesses and small-scale farmers.
- Women in GVCs have a 10 percentage point higher probability of being in the formal workforce than women in sectors not highly integrated.
- Digital trade and platforms:
- Digital technologies help women overcome constraints (limited access to finance, education, mobility, flexibility).
- Example from platform data: about half of the entrepreneurs on Alibaba platforms are women, compared with a quarter among all entrepreneurs in China.
- Growth in online education and health services increases access and employment opportunities in sectors with lower discrimination.
Barriers and policy frictions that limit gains
- Tariff bias and "pink tariffs":
- Female-intensive sectors (food and beverages, textiles and apparel) on average face higher tariffs on inputs.
- In India, this "pink tariff" amounts to 6 percentage points.
- Nontariff measures and fixed-cost burdens:
- Product standards and regulatory measures often impose fixed costs that disproportionately affect small and medium enterprises—frequently women-owned—compared with large firms.
- Small exporters lack specialized teams, export infrequently or in small batches, and face costly administrative procedures; additional barriers include limited access to trade financing and higher exposure to extortion and physical harassment at the border.
- Complementary constraints:
- Time constraints and limited geographic mobility due to family caregiving roles reduce women’s ability to capture trade gains unless addressed by coordinated policy.
Policy recommendations and reforms
- Trade policy and facilitation:
- Adjust tariff policy to close gender gaps in input tariffs.
- Streamline regulatory requirements and trade facilitation to reduce fixed-cost burdens for small exporters.
- Broader enabling policies:
- Improve access to education, financial resources, digital technologies, and information for women.
- Design coordinated and complementary policies that address specific barriers (time constraints, mobility limits) to ensure women can maximize trade benefits.
- Labor market and adjustment policies:
- Implement complementary labor market policies to help women acquire new skills or relocate as comparative advantages shift due to trade-related disruptions.
- International cooperation:
- Advance cooperation on gender-informed trade policy and trade facilitation to promote gender equality without necessarily targeting women explicitly.
Risks, recent shocks, and the need for continued data and research
- Pandemic impacts:
- In 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 (not accounting for informal earnings).
- Pandemic shocks disproportionately affected sectors that employ more women and increased caregiving burdens due to childcare and school closures, though teleworking mitigated some effects.
- Pandemic-driven investment in digital technologies may expand women’s opportunities in trade.
- Geopolitical and protectionist risks:
- Rising protectionist pressures, GVC reshaping, and geopolitical tensions threaten to reverse gender-equality gains; open trade will be essential to a gender-inclusive recovery.
- Research and data needs:
- Additional studies of trade’s impact on women are required to design targeted policies; this analysis depends on more and better gender-disaggregated data.
Source: F&D Magazine, June 2023 — Nadia Rocha and Roberta Piermartini.
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