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Finance & Development
A quarterly magazine of the IMF
June 2007, Volume 44, Number 2

Smart Economics
Mayra Buvinic and Elizabeth M. King

More needs to be done to promote the economic power of women

With just eight years remaining to meet the Millennium Development Goals (MDGs), the global community is focused on what's being done to halve poverty from 1990 levels by the target date of 2015 and to meet several other objectives, including improving health and education (see Box 1). But much lower on the radar is the third of the eight United Nations goals (MDG3), which calls for redressing gender disparities and empowering women.

Greater focus on MDG3 is critical because—although valuable in its own right as an important development objective—it is also a key to achieving several others, such as universal primary education (MDG2), a reduction in under-5 mortality (MDG4), improvements in maternal health (MDG5), and reducing the likelihood of contracting HIV/AIDS (MDG6).

Box 1
What are the MDGs?

In September 2000, at the United Nations Millennium Summit, world leaders agreed to a set of time-bound and measurable goals and targets for combating poverty, hunger, disease, illiteracy, environmental degradation, and discrimination against women. Placed at the heart of the global agenda, they are now called the Millennium Development Goals (MDGs).

The eight goals for 2015:

  1. Halve extreme poverty and hunger
  2. Achieve universal primary education
  3. Empower women and promote equality between men and women
  4. Reduce under-5 mortality by two-thirds
  5. Reduce maternal mortality by three-fourths
  6. Reverse the spread of diseases, especially HIV/AIDS and malaria
  7. Ensure environmental sustainability
  8. Create a global partnership for development, with targets for aid, trade, and debt relief

Moreover, greater gender equality (see Box 2) can also help in the battle to reduce poverty (MDG1) and promote growth—directly by boosting women's participation in the labor force and increasing both productivity and earnings, and indirectly through the beneficial effects of women's empowerment on children's human capital and well-being (see Chart 1). The empirical evidence on these benefits is compelling. Whether self-employed or earning wages, working women help their households escape poverty. Women are more likely than men to face constraints to access credit markets, but when they are the direct users of credit rather than men, the impact of credit on several measures of household welfare is greater. When women have more schooling, the returns flow not only to themselves but to the next generation as well. And when they have greater control over resources in the family, they are more likely than men to allocate more resources to food and to children's health care and education, a finding from as diverse a set of countries as Bangladesh, Brazil, Côte d'Ivoire, Ghana, Indonesia, and South Africa. Indeed, studies have shown that giving women more access to education, to markets (labor, land, credit), and to new technology, and giving them greater control over household resources often translates into greater well-being for themselves and their families. For women, their families, and their communities, this is smart economics.

Box 2
What do we mean by gender equality?

The 2006 World Development Report on equity and development refers to gender inequality as the "archetypal inequality trap." The sharp differences between men and women in access to assets and opportunities in many developing countries restrict women's basic freedom to choose and have negative consequences for the well-being of their children, families, and communities. These differences entrench inequality and are unfair (World Bank, 2005).

Gender equality does not necessarily mean equality of outcomes for males and females; it means equal access to the "opportunities that allow people to pursue a life of their own choosing and to avoid extreme deprivations in outcomes"—that is, gender equality in rights, resources, and voice (World Bank, 2001 and 2005). Equality of rights refers to equality under the law, whether customary or statutory. Equality of resources refers to equality of opportunity, including equality of access to human capital investments and other productive resources and to markets. Equality of voice captures the ability to influence and contribute to the political discourse and the development process.

Chart 1. Compound effects

This article examines progress so far toward achieving MDG3 and looks at ways that policies could make a difference. It measures gender equality in rights, resources, and voice, in three domains: the household, the economy and markets, and society (see Chart 2). There is still a long way to go to attain MDG3. A first important step is to improve the official indicators and data being used to monitor progress.

Chart 2. Spheres for improvement

Progress with MDG3

So how is progress on this MDG measured? To begin with, there is an official target: "the elimination of gender disparities in primary and secondary education, preferably by 2005, and at all levels of education not later than 2015." In addition, there are four official indicators dealing with enrollment, literacy, jobs, and voice (see Table 1). Together they provide an important, albeit incomplete, snapshot of progress toward gender equality.

Table 1
Partial snapshot

Current indicators used to measure progress on MDG3 provide an incomplete picture of what is being achieved.

Economy and markets
Ratio of girls' to boys' enrollment in primary, secondary, and tertiary education Proportion of women in wage employment in the nonagricultural sector Proportion of seats held by women in national parliaments
Ratio of literate females to males among
15- to 24-year-olds

Source: United Nations.

Enrollments. Thanks to global efforts to achieve universal primary education (MDG2), girls' enrollments at all levels of schooling have risen significantly. By 2005, 83 developing countries (of 106 with data) had met the intermediate MDG3 target of parity in primary and secondary enrollment rates (see Table 2). In all, 22 countries are off track to meet the MDG3 target by 2015—16 of them are in sub-Saharan Africa and 9 are fragile states (of 14 fragile states with data). Enrollment at the tertiary level is a more complex picture. Enrollment rates of women lag behind those of men in 63 countries (of 130 countries with data), but exceed those of men in 65 countries. When girls achieve very high enrollment rates at the primary and secondary levels, they are more likely than boys to continue to higher education—the case in East Asia and in Latin American and the Caribbean. In these countries, there are generally no significant social barriers for girls to continue schooling, whereas young men are faced with choosing between further schooling and many more opportunities for paid work after secondary school than girls have.

Table 2
Passing grade

Most countries, except in Africa, will attain primary and secondary enrollment targets by 2015.

target by
On track
to achieve
target by
Off track
or unlikely
to achieve
target by
Sub-Saharan Africa
East Asia and the Pacific
Europe and Central Asia
Latin America and the Caribbean
Middle East and North Africa
South Asia
Of which: Fragile states1

Source: World Bank estimates using data on enrollments between early 1990s and 2004/2005.
Note: The column showing countries with no data indicates the number of countries with missing data either at the start of the period, at the end of the period, or both.
11Fragile states are countries scoring 3.2 and below on the Country Policy and Institutional Assessment (CPIA).

Literacy. There is evidence of higher literacy rates and greater gender parity among youth (ages 15–24). But gender gaps remain: the United Nations Educational, Scientific, and Cultural Organization estimates that of the nearly 137 million illiterate youths in the world, 63 percent are female. The female-to-male literacy ratio is lowest in sub-Saharan Africa, the Middle East and North Africa, and South Asia—regions that also had female disadvantages in primary and secondary enrollment.

Jobs. Women's share of nonagricultural wage employment increased in all regions during 1990–2005 (see Chart 3). In 2005, the share of women in nonagricultural employment was highest in Europe and Central Asia (47 percent) and lowest in South Asia and in the Middle East and North Africa (20 percent). The trends and patterns in this indicator are difficult to compare across countries, however, without considering the size of a country's nonagricultural employment relative to total employment. A favorable score on this indicator in a country that has a small nonagricultural sector would mean less for women than in a country with a large nonagricultural sector.

Voice. Between 1990 and 2005, all regions except Europe and Central Asia and East Asia saw an increased presence of women in national parliaments, especially in sub-Saharan Africa and Latin America and the Caribbean. However, in no region did the average proportion exceed 20 percent (see Chart 3).

Chart 3. Gaining ground

New indicators needed

As helpful as these indicators are, however, they fall well short of what is needed to measure progress on MDG3. They do not monitor key elements of gender equality, such as health outcomes and disparities in access to such productive resources as land, credit, and new technology. They are far better at measuring how females fare relative to males than whether females are able to better their lives. And changes in indicators based on parity ratios are difficult to interpret without a sense of the absolute levels of these indicators. When female-to-male ratios increase, this could be the result of scores rising for females or scores falling for males. Rising female rates of school enrollment or literacy are undoubtedly welcome, but falling rates of male enrollment or literacy are not.

Moreover, national-level indicators—whether parity ratios or absolute levels—can mask large inequalities between groups. For example, data across countries show that disparities in school enrollment rates between boys and girls are much larger in rural areas than in urban areas. Indeed, there are other sources of exclusion besides gender and those sources can exacerbate gender inequalities, and vice versa.

For these reasons, the 2007 Global Monitoring Report—an annual report of the IMF and the World Bank that monitors progress on meeting the MDGs—has proposed the immediate adoption of five supplemental indicators (see Table 3). These indicators, complementary to the official MDG3 indicators, meet three criteria: data availability (wide country coverage), strong link to poverty reduction and growth, and amenability to policy intervention. Indicators that met all three criteria but were highly correlated with other indicators were dropped from the list. Although additional indicators pertaining to markets (availability of credit, for example) and society (for example, voice in the community or local politics) would provide a much more complete picture of gender equality, the unavailability of data that are collected in a comparable and timely manner across developing countries has made this infeasible now.

Table 3
Fuller snapshot

Recommended additional indicators for MDG3

Economy and markets
Modifications of official MDG indicators   Additional indicator Additional indicator
Primary school completion rate of girls and boys (MDG2)1 Percentage of 15 to 19-year-old girls who are mothers or pregnant with their first child2 Labor force participation rates among women and men aged 20–24 and 25–492
Under-5 mortality rate for girls and boys (MDG4)    
Percentage of reproductive-age women, and their sexual partners, using modern contraceptives (MDG6)    

Source: World Bank staff.
1Recommended by the UN Millennium Project Task Force on Education and Gender Equality.
2Under consideration by the Inter-Agency and Expert Group for MDGs.

Disaggregating the other MDGs by sex adds valuable information about gender equality. For example, under-5 mortality rates are typically higher for boys than for girls in countries where there is no significant discrimination against girls because of biological differences between the sexes. In four countries known for gender equality (Denmark, Finland, Norway, and Sweden), the female-to-male ratio is between 0.81 and 0.88. In contrast, not only is female under-5 mortality in the South Asia region double that in other developing regions, except sub-Saharan Africa, but the female-to-male ratio is also higher than in any other region and far exceeds the range seen in the Scandinavian countries. And the East Asia region exhibits a worryingly high female-to-male ratio combined with overall low under-5 mortality rates (see Chart 4).

Chart 4. Favoring boys

MDG3 development challenges include

  • closing gaps in well-being (health and education) and opportunities for girls and women who are doubly disadvantaged because of their sex as well as their race, ethnicity, caste, disability, and location (rural versus urban);
  • giving priority to improving and monitoring gender equality and women's empowerment in sub-Saharan Africa, which consistently lags behind in most areas measured by MDG3;
  • paying special attention to gender equality and women's empowerment issues in fragile states, where progress on gender equality is hampered by slow economic advancement and conflict; and
  • scaling up significantly the collection and analysis of sex-disaggregated data to measure more accurately and fully the progress in achieving MDG3. Data on all the official indicators of MDG3 are available for only 59 out of 154 countries for 2000–05; even fewer countries have time-series data that would allow tracking the indicators over time. For the official and expanded list of indicators discussed here, only 41 countries have data for the same period, considerably limiting the ability to monitor progress, learn from success, and, ultimately, make informed decisions regarding investments and policy.

Policies that promote gender equality

To promote gender equality, policies need to address inequalities in rights, resources, and voice. In many cases, what is needed are policies that remove gender-specific barriers, thus ensuring a more level playing field for males and females. In other cases, gender-targeted policies that provide extra incentives for more investments in girls' human capital, for example, are needed to counteract initial inequalities between males and females. Even countries that score poorly on gender equality are adopting a range of policies to do better.

Promoting equal rights. High-performing countries generally have eliminated discriminatory laws condoning differential treatment of men and women, whereas many low-performing countries have not. Women in low-performing countries are often treated as minors in family law; for instance, they cannot pass on citizenship to a child, and their options for employment and ability to own productive assets are directly or indirectly constrained.

In addition, while many high- and low-performing countries have enacted constitutional or legal reforms to level the playing field for men and women, high-performing countries have stronger institutional frameworks to enforce those laws. Many legal changes ensuring equal rights for men and women are quite recent, and they underscore the fact that legal changes often follow and reflect social change. Pakistan illustrates this close connection between social and legal changes. Its national assembly passed the Protection of Women Bill in November 2006 after much debate and controversy. Removing rape from the jurisdiction of Islamic laws, the bill makes rape a crime punishable under the country's penal code. And despite its overall low scores on gender equality, Pakistan improved gender parity ratios considerably in secondary and tertiary schooling and increased women's representation in parliament from 10 to 22 percent during 1990–2003. These gains quite likely set the stage for the bill's passage into law.

Enabling equal access to resources. Gender-informed investments in human capital are central to promoting gender equality, and low-performing countries with aggressive education policies are on a good track. Malawi, for instance, has achieved significant increases in gender parity ratios at all levels of schooling, thanks both to universal free primary education (1994) and to a specific emphasis on girls' schooling.

A number of factors are associated with providing greater opportunities for women in the labor force. In the European transition countries, gender equality is the legacy of explicit state policies that emphasized employment as both a right and a duty for men and women. Years after the transition to a market economy, women in these countries appear to have maintained their position in the labor market, though there is a concern that barriers to access of productive resources and constraints imposed by household duties prevent women in Central and Eastern Europe from taking full advantage of economic liberalization.

In the Latin American countries that record high rates of female participation in wage employment, the rise in women's participation in the 1990s does not seem to have resulted from specific government policy or economic growth (because it occurred despite widespread economic stagnation in the region in the 1990s). Instead, this rise seems related to profound changes in women's roles in the household and in the labor market that may have resulted from their better education, later age at marriage, and lower fertility. But cultural and social factors can undermine as well as reinforce the impact of structural changes in the economy. Cultural norms about the role of women outside the home seem to constrain women's employment options in countries in the Middle East and North Africa that have otherwise achieved high levels of female schooling.

Providing equal voice. Increases in women's representation in parliament in several countries can be directly attributed to affirmative government action. Two countries with high representation of women in parliament are Argentina and Costa Rica, which adopted quota laws for women's representation in parliament in the early 1990s. In Argentina, the current female membership in the National Congress is the highest ever attained—42 percent in the Senate and 33 percent in the House. Quota laws, although they have drawbacks, appear to help solidify women's gains in parliamentary representation; without them, women's gains in representation seem quite volatile. Other countries, such as India, the Philippines, Rwanda, and Uganda, have followed suit with variations on this policy.

* * * * *

The long-term benefits of these and other policies to promote gender equality come with costs in the short run. These include budgetary expenditures to scale up policies and monitor progress in attaining MDG3. In addition, there may be short-term political and economic costs. In the long run, however, greater gender equality in access to opportunities, rights, and voice can lead to more efficient economic functioning and better institutions, with dynamic benefits for investment and growth. The business case for investing in MDG3 is strong—it is nothing more than smart economics.

This article draws largely on Chapter 3 of the 2007 Global Monitoring Report, which is authored by Mayra Buvinic, Elizabeth M. King, Andrew Morrison, and Nistha Sinha.

Mayra Buvinic is Sector Director for Gender and Development, PREM, at the World Bank, and Elizabeth M. King is Research Manager in the World Bank's Development Economics Research Group.