TradeVistas | empowering women through trade

The Virtuous Circle Created by Women Who Trade

The lives of women around the world have improved over the last 30 years: they are living longer, receive more education, have better access to legal rights, and earn more. But there’s much more to be done to close the economic gap for women, by improving education, addressing lingering legal disadvantages and reducing their suffering at the hands of abusers.

Expanded international trade has offered important opportunities to women worldwide. Research from the World Bank and the United Nations Conference on Trade and Development (UCTAD) finds that globally engaged firms are larger, more productive, more capital intensive and pay higher wages than purely domestic firms. As such, women’s involvement in trade is a key driver in achieving gender parity in economic outcomes.

A Virtuous Circle

Women’s economic empowerment through trade benefits everyone: it boosts GDP, increases economic diversification, and enables a virtuous circle of positive outcomes for men, women and children.

How? Because when more women are involved in trade, a country’s productivity and competitiveness increase. As economic growth goes up, poverty goes down and educational opportunities are created for women, in turn creating more opportunities for more women to trade.

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Jobs, Jobs, Jobs

The main way that trade benefits women is through job creation. Particularly in developing countries, many women don’t have access to formal work, either because they are legally or culturally barred or because the jobs just don’t exist. The autonomy an income provides helps give women the power to make their own decisions and shape their own lives.

Quality is as important as quantity, hence the emphasis on formal work. Global firms that are active across borders are more productive and pay higher wages than purely domestic ones. Furecommethermore, jobs in exporting sectors offer higher salaries and are more skill-intensive. Therefore, as trade increases, the quantity and quality of jobs improves. Ensuring women have access to these jobs enables them to become productive and autonomous wage-earners and incentivizes the pursuit of education and training.

Open trade regimes help spur growth and productivity. Research by the OECD found that, on average, trade plays a positive role by creating jobs, increasing wages, and improving working conditions. Technological innovations have increased trade and facilitated the entrance of many more women to the workforce.

Onboarding to the Global Economy

The rise in export opportunities in light manufacturing, such as textiles and apparel, has been a boon for women, particularly in developing countries. Although the work can be difficult and low-paid, for many it has been an entry point into the formal labor market – which makes all the difference. It has allowed many women to earn an independent income for the first time and shift household power dynamics toward a more equitable balance.

Reducing tariffs and liberalizing trade has been shown to be beneficial to women by reducing gender discrimination. Studies on the effects of tariff reduction in Colombia and Mexico both found that exporting firms that faced lower tariffs increased female employment share and female wage share.

Tech Takeoff

The rise in e-commerce has also particularly benefited women, granting easier and direct access to national and international markets. It has allowed small businesses to expand beyond their localities. Websites like Etsy have allowed individuals who may have once handcrafted items for friends to expand their businesses to sell and ship globally. On Alibaba, China’s behemoth e-commerce site that boasts revenues of around $70 billion, almost half of all online shop owners are women.

Technology continues to play an essential role in this field, expanding what is able to be traded digitally. Women have long been a key part of the growing services trade. As it becomes possible for more services to be bought and sold online, their market share will continue to bloom.

Three Success Stories

Trade data is rarely broken down by gender, so picking apart the effects of increased trade opportunities for women can be difficult and unclear. However, we can use data to help explain real-world examples of where trade liberalization and access to trade opportunities for women have had tangible benefits.

Success Story 1: The Garment Industry in Lesotho: When trade barriers were removed under the U.S. African Growth and Opportunity Act (AGOA) in 1999 providing duty-free access to the U.S. market, Lesotho’s clothing industry grew from 10,000 jobs to 48,000 by 2004. Most of the new jobs were filled by women who make up the bulk of the workforce (estimates vary from 70 to 98 percent) in the textile and clothing sector. Around 63 percent of those women came from rural areas. These jobs gave many women, who previously had not had many opportunities, the chance to earn an income and set their own path.

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Success Story 2: Lower Tariffs and Labor Force Participation in Indonesia and China: In the 1990s, both China and Indonesia saw large tariff reductions. Data show the tariff reductions coincided with an increase in the percentage of females in salaried (formal) employment. In Indonesia, trade liberalization decreased gender segregation by occupation, particularly for low-skilled workers, and the increased labor force participation of women led to delayed marriage. In China, reductions in output tariffs reduced the gender employment gap in the manufacturing sector.

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Success Story 3: Higher Educational Attainment in India

India has been undergoing economic reforms since the early 1990s, opening up to trade and becoming a key global player. Between 2011 and 2015, India’s total global trade was third only to the U.S. and China. This has led to a huge job growth in India for both genders and illustrates the other benefits that improved trade can bring.

Since the ‘90s, India has seen a steady increase in women attaining secondary education, illustrated in the below graph. The return on skills that trade brings increases the value for women (and their families) to attain education.

Research by Marchand, Rees and Riezman has also shown that female labor force participation is not only correlated with increased education for the adult female population, but also for their children. If a woman works one extra day a week, they calculated that this was associated with a 5 percent increase in the schooling probability for children aged 7 to 10.

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More to be Done

Although trade has facilitated the economic empowerment of millions of women, there is still much room for improvement. Women are still globally disadvantaged compared to men. They have less education; fewer can or do work; and in many parts of the world they lack the same essential rights to property ownership, inheritance, or access to finance that would help them succeed. Increasing access to the opportunities global trade provides must go hand in hand with innovation, leadership and regulation that address these gender disparities.

The importance of getting more women involved in trade is illustrated by numerous initiatives by local and international organizations. One of the largest is the Buenos Aires Declaration on Trade and Women’s Economic Empowerment which 118 WTO members signed on to in 2017. It aims to boost economic growth worldwide by reducing barriers to trade for women.

We should take a moment, however, to celebrate how far we’ve come so far. Trade has already helped lift many women out of poverty, improving the lives of their families and their communities. Let’s ensure it continues to do so.