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Equality of opportunity as an engine of prosperity

Augusto Lopez-Claros's picture

We have learned much over the past several decades about the connection between gender inequality and economic growth, particularly when we talk about inequalities in education and employment. Inequalities in education, for instance, artificially reduce the pool of talent which societies can draw from; by excluding qualified girls from the educational stream and promoting less qualified boys, the average amount of human capital in a country will be reduced and this will have an adverse impact on economic performance. We also know that the promotion of female education leads to lower births per women, not only because educated women will have greater knowledge about family planning but also because education creates greater opportunities for women that may be more attractive than childbearing.

Lower fertility levels help reduce child mortality and expand the range of educational opportunities available to the next generation. All of these factors combine to boost economic growth. Indeed, the effects of lower fertility levels associated with improved female education have long-lasting effects and deliver a “demographic dividend” a couple of decades later. With reduced fertility levels the working-age population will grow more rapidly than the overall population and this will boost per capita economic growth.

Yet another powerful driver of economic growth associated with the narrowing of employment gender gaps has to do with the “bargaining power within families.” Not surprisingly, when women work and earn income as a result, they will be more empowered within the home. Beyond the direct personal benefits to her, the economics literature has identified a number of other favorable effects such as higher savings, more productive investments and better use and repayment of credit, all of which are beneficial for economic growth. Other studies have shown that with greater female power within the household there will be higher investments in the health and education of children, thereby planting the seeds for the accumulation of human capital in the next generation.

A further avenue of influence has to do with growing evidence that women workers are less prone to corruption and nepotism than men workers. The criminology literature, for instance, has long established that “the most consistent pattern with respect to gender is the extent to which male criminal participation in serious crimes at any age greatly exceeds that of females, regardless of the source of data, crime type, level of involvement or measure of participation.” [1] More recently, a survey of 6,500 companies carried out in the United Kingdom looking at the gender composition of company boards showed clear evidence that companies with greater female participation in boards were less likely to be hit by governance scandals involving bribery, fraud and other factors likely to depress business confidence.[2] So, boosting the employment of women is likely to be beneficial for economic growth through improvements in the quality of governance.

Of course, while governments have played a central role over the past century in the creation of a legal framework that has placed important limitations on women’s ability to contribute meaningfully to the economy or that have shaped in some adverse way her economic surroundings (see the Women, Business and the Law report for a detailed compendium across 143 countries of the ways in which this has been done), there are many other forms of discrimination embedded in the law, that go well beyond issues of gender.  

Article 20 of the Constitution of Iran establishes that all citizens of Iran have to be "in conformity with Islamic criteria." Hence, members of the Baha’i community, Iran’s largest religious minority, are denied access to schools and universities, barred from public sector employment, and face severe work restrictions in virtually every other sector of the economy. In Lebanon, groups such as Baha'is, Buddhists, and Hindus may own property and assemble for worship, but may not marry, divorce, or inherit property within the country. The Uganda Anti-Homosexuality Act of 2014 punishes "aggravated homosexuality" with life imprisonment and the "offence of homosexuality" with a prison sentence of up to 14 years.

There is clearly a role for government to create the enabling conditions for a sound economy and an equitable society that makes efficient use of the natural, economic and human resources available to it to meet the needs and ensure the well-being of everyone. Poverty is one indicator of government failings in this area. Despite the rapid growth experienced in several developing countries over the past few decades, more than 1 billion people still live in extreme poverty, and inequality is increasing around the world.

The World Bank has committed to achieving the twin goals of eliminating extreme poverty and boosting shared prosperity. These goals go hand in hand with equality of opportunity and the inclusive participation of all segments of society in the economic and social spheres. Poverty is often greatest in traditionally marginalized groups, and various forms of discrimination can greatly depress the prospects for its alleviation.

The most sustainable path towards ending extreme poverty and promoting shared prosperity is through creating an inclusive society, allowing everyone, including traditionally marginalized groups such as ethnic, religious, and other minorities, the same opportunity to participate in and benefit from the economy. Governments have a critical role in creating a foundation for equality of opportunity, both through dismantling laws, regulations and policies which actively discriminate against certain groups, and through adopting and promoting mechanisms enhancing the enforcement of anti-discrimination legislation. 

Prosperity involves more than just increasing and distributing wealth. Human well-being includes social, cultural, ethical and spiritual dimensions. The diversity and additional perspectives contributed by presently marginalized groups can, when allowed full expression and participation, enrich the community and society and add to collective prosperity. Equality of opportunity not only prevents a waste of human resources and capacities, but also opens the potential to even higher levels of social and economic well-being.

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[1] From a study conducted by the National Academy of Sciences of the United States, cited in Swamy, Azfar, Knack and Lee (2001).
[2] Financial Times (March 9, 2015).

Comments

Submitted by Norie Sekimoto on

I fully subscribe to the idea that "The most sustainable path towards ending extreme poverty and promoting shared prosperity is through creating an inclusive society, allowing everyone." Some of the most dynamic successful middle income countries succeeded (not fully yet, though)in creating the society where everyone has a chance as long as one gets education and work hard. Such collective belief is the powerful driver to get the most out of each individual. Where the system always cheat you and the lower end of population resign to the thinking that nothing will change in their lives even with education and hard work, the country loses - their potential is wasted and the poor remains poor. In that sense, tackling the corruption and creating the fair system (participation of diversified population) seem to be the most important factor for economic prosperity. With the corrupted government (typically the country of the rich and the extremely poor without a middle class), it is impossible to create such inclusive society. As Augusto mentions above, corruption should decrease with more diversified society where everyone has a chance. Indeed, economic prosperity involves heavily in spiritual dimension!

Norie,

You touch upon the issue of corruption and its destructive effects on human prosperity. I think that in a long-term perspective, anticorruption strategies have to be supported by moral education and the strengthening of the ethical principles underpinning society. Appropriate policies and the right sorts of incentives may, in the end, go some way in addressing the problem of corruption but may in many places not be enough. This may mean reinforcing the civic responsibility component of secular education. It may require religious leaders—who bear such heavy responsibility for the decline of religion as a force for social cohesion—to set aside narrow doctrinal differences and return to the spiritual roots of their respective faiths to revitalize their ability to lead individuals and societies to a stronger identification with the spiritual rather than the material dimension of human nature. In particular, it will involve partnerships with all the organizations and social forces that have a strong ethical foundation. In a society with stronger ethical standards, the struggle against corruption will gain a new source of strength that will complement the progress made in recent years in improving the legal framework designed to combat bribery and corruption.

Submitted by Bir Singh on

I don't think if there is anything new in this article. While no sane people can question empowering role of education, the real challenge lies in delivering it to the citizens with full commitment by the state and economic systems. In the current tide of commercialization of even essential goods and public goods viz education and health, wishful thinking expressed in the article for delivery of education to women for their empowerment doesn't offer any hope to the beneficiaries in developing and poor countries. Unless economics and politics, the systems made and run by human beings, are made humane by the ruling elite,such day-dreaming of empowerment of people would remain a Utopia. Bir singh

Bir,

I do not believe that the delivery of educational opportunities to women is “wishful thinking” at all. According to the World Bank World Development Report on gender (2012, p. 141) gender gaps in participation in education “have shrunk dramatically at all levels.” In 1980, girls’ primary school enrolment was 75 percent on average across the world and was slightly higher, at 80 percent, for boys. But by 2012 this gap had almost disappeared and there were 89 percent of girls enrolled in primary schooling as against 90 percent of boys. So, if you agree that education is empowering, then women are being empowered as we speak. However, the quality of this education remains weak. Curricula must change, pedagogy redesigned, teachers re-trained, the priorities of school administrations redefined, and governments need to re-adjust budgets and re-allocate resources to cover these new developments. 

Submitted by Flavio da Silveira on

Very interesting article dealing with an urgent matter. Two points come to mind: first, it seems that a psychological feature is an important aspect of the problem. It could be the subject matter of another blog. As an example, the observation that “women workers are less prone to corruption and nepotism than men workers” is almost equivalent to saying that women are more realistic, or less risky, that men. It could perhaps mean that women are “clever” and men “smart”. Anecdotal evidence tends to confirm that. Second, the fact that discriminations of all sorts are major hurdles to development is often a problem of a “cultural” nature and, as always, it relates to the universal recognition of “universal” principles and values. Unfortunately, it seems that universality is not fashionable these days.

Flavio,

I like the distinction you make between “clever” and “smart”. What it highlights to me is that societies that empower women and actively work on eliminating various forms of discrimination against them are making it possible to tap into the complementary set of talents and skills that peoples of diverse backgrounds have. You are correct in noting that some issues of discrimination have a “cultural” dimension, and whether, in fact, we have a set of broadly accepted universal values. One important consideration in this respect is whether those claiming cultural exceptions are speaking with credible authority. In the 1990s Taliban representatives used to claim that forbidding women to work and prohibiting girls from going to school was part of their “culture” and that the international community should respect these choices. However, the Taliban never actually asked Afghanistan’s 11 million women whether they agreed with these restrictions (they didn’t!) and thus their claims to speak on behalf of Afghan society lacked all credibility.

Submitted by Flavio da Silveira on

Augusto,

Thank you. I could not agree more. Without trying to be “clever”, I do believe in universal values and principles, in particular those that are common to every religion. The need to elevate them beyond all religions seems to be the crux of the matter. History is there to suggest that some moral maturity and peaceful relations require respect and willingness to dialogue. These, it appears, will not rest on strong foundations as long as men trust to own a divine truth.

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