Tag: Gender

Gender Equality and Economic Development: From Research to Action

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It’s increasingly being acknowledged that gender inequality is not just a human rights issue, but of first order importance for economic development. It is also an issue of high priority for the Swedish government, with the feminist foreign policy gaining a lot of attention worldwide. This policy brief shortly summarizes presentations held during a full day conference at the Stockholm School of Economics on June 1, 2018. The event focused on how gender discrimination negatively impacts the productivity of low and middle income economies, but also how reforms and specific initiatives can better the situation. The perspective was both long term, how norms and laws governing women’s rights have evolved over time, and short term, illustrating the current challenges women and societies face, with a particular emphasis on the situation in Eastern Europe. This was the 7th installment of SITE Development Day – a yearly development policy conference organized with support from the Swedish Ministry for Foreign Affairs.

From Research: Causes, Costs and Remedies

Cross-country differences in gender equality are often explained by variation in formal institutions such as laws and policies, and informal institutions such as social norms, religion and culture. A recent literature has focused on understanding the underlying drivers behind the variation in gender norms, arguing that these norms themselves may be functions of predetermined fundamentals such as geography, language and external shocks such as wars, revolutions or the slave trade. An influential line of research has emphasized that certain agricultural conditions have given prominence to technologies that require more muscular strength (the plow), whereas in shifting agriculture, hand-held tools like the hoe and the digging stick, require less upper body strength, are more labor intensive and easier to combine with child care. The former conditions are therefore associated with a stricter gender division of labor that generated a norm that the natural place for women is in the home. That these differences still linger have been empirically shown looking at cross-country variation in outcomes such as female labor force participation, political representation, inheritance rules, polygamy, parental authority and women’s freedom of movement. The variation is also found among second generation immigrants, where the attitudes from the parents’ ancestry are reflected also among those born and raised in western societies with more equal gender norms.

There has been an increasing emphasis on trying to estimate how gender inequality inhibits economic development, and to put numbers on the foregone economic development and growth from continuing inequality. A key indicator of inequality in this respect is the gender gap in labor force participation. There has been progress globally in this respect, but we are still far from equality and outcomes vary dramatically across regions and countries. Traditional approaches to estimate the benefits of increased female labor force participation (flfp) has assumed perfect substitutability between men and women. New evidence suggests that this may not be true, that men and women are complementary, which implies that increased flfp increases production beyond just the fact that more people are put to work. This also means that more women in work increases the productivity of men, in other words a win-win situation. This complementarity effect can take place at the workplace (think of diversified company boards), but recent research suggests that this is particularly true at the macro level. This is likely because men and women tend to work in different sectors and occupations that are themselves complementary, yielding the additional benefit at the macro level. Estimates of welfare gains of eliminating barriers to female labor force participation to levels seen in the US, suggest improvements of on average 22 % in South Asia and 18 % in the Middle East and North Africa region.

One important policy tool to influence gender outcomes, and sometimes also gender norms, is tax and benefits policy. These sets of policies are almost never explicitly gender biased, but the impact of details of policies in areas such as inheritance law, parental leave, pensions and taxes all affect the incentives that men, women and couples face. It is also important to understand that these policies often operate in an environment that is far from being without a gender bias, suggesting that there may be motivation for government intervention to correct outcomes and also lead the way to slowly change norms. As models of household decision-making suggest that partners may not operate as a unitary actor maximizing joint welfare, and women typically have lower bargaining power within the household, policies that leave discretionary power to the couple may lead to highly unequal outcomes. Instead policies may need to be individualized, such as tax policy and parental leave policy.

The conference also contained a panel specifically focusing on Eastern Europe. The communist legacy meant that these countries, in some dimensions such as flfp, started from much more equal levels than other countries at comparable levels of income in the 1990s. The most immediate gender crisis in some ways was on behalf of men, whose life expectancy dropped dramatically. This crisis for men also created externalities in the form of domestic violence and orphaned children. Since 1990, there has therefore been some reversals in gender outcomes, and in some areas, such as political representation, the region on average performs quite poorly. Individual countries also face very different challenges. In Georgia the sex ratio at birth increased dramatically in the 1990’s as economic hardship and conflict coincided with the introduction of new technology to determine the sex of a child in utero. In Belarus inequality strikes both ways, with men having more than 10 years lower life expectancy, have higher retirement age and are drafted to military service. On the other hand women are under-represented in politics and largely responsible for unpaid homework, partly due to a very generous 3 year-long paid maternity leave policy. The tradition of bride kidnapping in parts of Central Asia (as high as 10-25 % of women in parts of rural Kyrgyzstan) was brought up, and research showing birthweight losses of children to kidnapped mothers equivalent to those measured elsewhere in conflict zones (100-200 g) suggest that this is indeed a real violation of these women.

To Action: Policies for gender equality

The SDG 2030 agenda and the concurrent finance for development process both emphasize the importance of having all sectors of society onboard in the quest of achieving the new development goals. The event therefore included representatives of both the private, public and civil societies, and featured a range of different initiatives across these sectors. A sector in which many women work for foreign companies in developing countries is textile. Here foreign companies can lead the way through initiatives beyond direct wage and employment policies that improve women’s welfare, such as information campaigns devoted to personal hygiene or policies that transfer salaries directly to the personal account of the employees (an approach that matters when there is unequal bargaining power within the household, as shown through research). Also initiatives to reduce harassment and support female careers can make a difference. A sector on the other side of the spectrum is the telecommunications sector, which is very male dominated. This bias typically start from an early age, and is reinforced by gender stereotypes. Active work in the community to early on reaching out with tech programs explicitly targeting girls can make a difference, and so can making people aware of unconscious biases.

Aid agencies and NGOs also play an important role in promoting gender equality in partner countries. Research shows that women in relative terms tend to spend resources in ways that benefit the family more, and discrimination can be counteracted through policies specifically targeting women and trying to strengthening their situation both outside and inside the household. Initiatives that give women access to credits, and foster collective action and political engagement have been tested on large scale in for instance India. Aid financed investment funds target female entrepreneurs, and engage in programs to integrate women into the investment process. Investors also have the leverage to stress the importance of partner companies investing in their female employees, for instance though education, safe transportation and separate changing rooms. A major player like Sida can engage in a dialogue also with partner governments to incentivize them to live up to commitments made in conventions and treaties, but also empower change agents that can put pressure on patriarchic structures. In the health sector, priority is given to sexual and reproductive rights, but beyond targeted interventions it is also important to mainstream a gender perspective into all types of projects and programs. It’s acknowledged that measuring impact is a challenge, and some partners are perceived as more receptive than others, but the perception is that attitudes are changing.

A Government Perspective

From the Swedish government’s side it was emphasized that gender equality is a goal in itself, as well as a prerequisite for economic development. The by now well-known feminist foreign policy is based on three R’s: that all women and girls should have access to rights, representation and resources. The policy is backed up by an action plan with clearly expressed goals in areas of peace and violence, political representation, economic empowerment and sexual and reproductive health rights. These goals will be evaluated for results (a fourth “R”) and, due to international demand, the foreign ministry is currently preparing a handbook for feminist foreign policy to document the process and the lessons learned. In the collaboration with Eastern Partnership countries, gender equality became part of the summit declaration in 2015. There’s an increasing willingness to talk about gender in the partnership countries, but many challenges remain, as also exemplified by recent experience from working in the government of Ukraine. Swedish initiatives are often a catalyst for change, though, with EU politicians and administrators slowly following pace. It was emphasized that to argue for the case of women and girls, data and research is crucial, so the FREE initiative to create a center of excellence in gender economics (FROGEE) was received with much appreciation.

To get more information about the presentations during the day and references to the data and literature discussed above, please visit this page.

Participants at the conference

  • Ann Bernes, Ambassador for Gender Equality and Coordinator of Sweden’s Feminist Foreign Policy, Ministry for Foreign Affairs.
  • Raphael Espinoza, Senior Economist, IMF.
  • Paola Giuliano, Associate Professor of Economics, UCLA, Anderson School of Management.
  • Michal Myck, Director at CenEa, Poland.
  • Anna-Karin Dahlberg, Corporate Sustainability Manager at Lindex.
  • Richard Nordström, General Director at Hand in Hand.
  • Karin Kronhöffer, Director Strategy and Communication at Swedfund.
  • Anne Larilahti, VP Head of Sustainability Strategy at Telia.
  • Jesper Roine, Deputy Director, SITE.
  • Charles Becker, Research Professor of Economics, Duke University.
  • Tamta Maridashvili, Researcher, ISET-PI, Georgia.
  • Lev Lvovskiy, Research Fellow, BEROC.
  • Elsa Håstad, Director at the Department for Europe and Latin America at Sida.
  • Inna Sovsun, Vice President at Kyiv School of Economics (KSE), Ukraine.
  • Anna Westerholm, Sweden’s Ambassador for the EU Eastern Partnership.
  • Carin Jämtin, Director General at Sida.
  • Torbjörn Becker, Director at SITE.

Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.

Women Entrepreneurs in Belarus: Characteristics, Barriers and Drivers

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This policy brief summarizes the results of the research on aspects of female entrepreneurship in Belarus. The aim of this work was to shed a light on what the features of female-owned business in Belarus are and whether there are any differences in the motives and barriers it faces compared with male-owned companies. Results show that female-owned companies are smaller in size, less likely to grow fast and less effective in the monetization and promotion of their innovative products and ideas. This is partly due to differences in social roles, motives, decision-making process and macroeconomic factors.

Women’s entrepreneurship is not just a question of gender equality but one of the sources for the sustainable economic development of the country. The presence of women among decision makers is beneficial for companies’ performance, effectiveness and innovativeness, and impacts the growth of profitability of the company (Akulava, 2016; Noland et al., 2016).

Little is known about the state of women’s engagement in economic governance in Belarus. According to the 5th wave of the BEEPS survey conducted by the World Bank, female top managers operate in around 32.7% of Belarus’ firms and 43.6% of firms have women among their owners (The World Bank, 2013). At the same time EBRD research shows that, on average, for every 10 men taking loans for the development of their own enterprise, only one woman did. Furthermore, the probability of loan rejection is 55% higher for women than for men in Belarus (these average numbers were presented by EBRD representatives during the conference “Business Territory: Women’s View”, Minsk, 2017). Unfortunately there is no information on the size and purpose of the loans, but potentially this may be a sign of discrimination and constraints on women’s economic activity.

We tried to expand the understanding of the role of women in Belarus’ private sector and to uncover individual, social, economic and cultural barriers that affect economic behavior and career choices of women, as well as introduce new drivers for female entrepreneurship in Belarus.

For this purpose we conducted interviews in 3 focus groups with the involvement of women entrepreneurs and also ran a survey that covered 407 owners and top decision-makers in the small and medium enterprises (SMEs).

The data analysis showed that around 30% of businesses belong to women (Table 1). Women tend to choose to operate in wholesale/retail trade, manufacturing, and medical/social services. Trade is the most popular with 28.9% of female-owned companies being part of this industry, while manufacturing stays second (10.1%). Trade also attracts the largest share of the male-owned companies (29.6%), next go manufacturing (23.9%) and construction (18.9%).

Table 1. Sectoral distribution by gender of the owner

 

Female-owned Male-owned
Share in total sample (%) 30.3 69.7
Sectoral distribution
Trade 29.0 29.6
Manufacturing 10.1 23.9
Construction 7.3 18.9
Medical and social services 8.7 1.3
Hotel and catering 8.7 2.5
Transport 7.3 10.1
Other 29.0 13.8

Innovative behavior changes slightly depending on the gender of the owner (33.3% of female- and 38.9% of male-owned companies have implemented innovations during the last 3 years). The measure of implemented innovative activities includes information on whether the company introduced any radical or incremental innovation (product/service/novelty in business processes/new strategy) during the last three years.An average female-owned firm grows much slower than male-owned business (Table 2). The annual sales gain and the sales gain over the last 3 years are 4 times and 2 times smaller respectively. The average number of employees is also smaller among female-owned companies (10 vs. 17 employees). On average, the owner of the male-owned firm has almost 15 years of relevant working and 13 years of managing experience. Similar characteristics for female owners are 12.8 and 9.7 respectively.

However, the realization of the implemented innovations as well as their relevance look more successful among the male-owned businesses. According to the answers in the survey, the profit share due to implemented innovations equals 28.8% among male-owned businesses and just 16.4% among female-owned. Thus, the major part of return is generated by the established business model and not the novelty.

Table 2. Business characteristics by gender of the owner

Female-owned Male-owned
Sales growth 1yr (%) 7.6 27.1
Sales growth 3yr  (%) 18.4 36.1
Size of the company (employees) 10.6 17.3
Age of the company (years) 8.8 10.2
Relevant experience of the owner (years) 13 14.7
Managing experience of the owner  (years) 9.7 12.8
Owners with a higher education (%) 91.3 86.2
Implemented innovation  (%) 33.3 38.9
Profit share of implemented innovations  (%) 16.4 28.8

 

One of the potential reasons for differences in characteristics and performance indicators between genders is self-selection, meaning that women are choosing less productive sectors in order to have more flexibility in balancing various social roles they play. In order to check for this, we compare the characteristics mentioned above in three different sectors (manufacturing, wholesale/retail trade and medical/social services) (Table 2a). The male-owned companies form the majority in the manufacturing sector, while medical/social services industry is mostly presented by female-owned business. Finally, the wholesale/retail trade sector is located somewhere in between and is well presented by both female- and male-companies.

Table 2a. Business characteristics by gender of the owner in manufacturing, wholesale/retail  trade and medical/social services

Wholesale/Retail Trade Manufacturing Medical and social services
Female-owned Male-owned Female-owned Male-owned Female-owned Male-owned
Sales growth 1yr (%) 9.8 31 2 26.2 10 n/a
Sales growth 3yr  (%) 16.4 37.9 5.6 42.3 17.5 n/a
Size of the company (employees) 5.9 14 23.7 19.8 13 8.5
Age of the company (years) 8.8 7.8 16.1 9.2 12.6 16
Relevant experience of the owner (years) 13 13.8 15.3 14.8 15.2 16
Managing experience of the owner  (years) 9.8 11.2 12.3 13.3 10.3 22
Owners with a higher education (%) 85 83 100 89.5 100 50
Implemented innovation  (%) 35 34.1 57.1 57.9 16.7 50
Profit share of implemented innovations  (%) 2.5 25 30 34.1 n/a n/a

There are differences in size and age of the businesses subject to the industry of the businesses. However, controlling for industry does not reveal any significant changes in the picture in terms of companies’ performance and effectiveness. Male-owned firms are still growing faster and are more successful in promoting implemented innovations Thus, this is likely not an issue of self-selection but of the way male and female owners operate their businesses.

The analysis revealed a number of internal and external barriers creating obstacles for doing business that breaks down into the following categories: social roles, educational patterns, decision-making process and general macroeconomic factors.

Women’s social roles in Belarus

Women in Belarus are mainly at the wheel of domestic responsibilities, which are rarely shared with male partners. According to the survey results, 40% of female and just 9% of male entrepreneurs are responsible for at least 75% of family duties (Table 3). 37% of female and only 0.74% of male owners said that they are in charge for taking care of kids. The same is true for the responsibility to stay at home when kids are sick (32.6% vs. 1.28).

Table 3. Distribution of domestic responsibilities by gender of the owner

Women Men
Family duties
less than 25% 10.91 37.5
around 50% 49.10 53.5
more than 75% 40.00 9.00
Kids
taking care of kids 36.96 0.74
staying at home, when kids are sick 32.61 1.48

At the same time, participants of the focus groups admitted that particularly childbirth motivated them to start their own business with flexible working hours and the possibility to work from home, which is generally not possible in corporate business in Belarus. Thus balancing between family and business becomes challenging, impacting career decisions. That motive also appeared in the survey where on average 13% of female and 2.5% of male owners started businesses in order to combine work with parenting. This trend does not change much if we control for industry.

Education

There is no significant gender difference in the educational level of business owners. According to the survey data, 91.3% of female and 86.2% of male owners have a university degree or higher. However, the established social role models of Belarusian women influence both their career and educational choices. Usually girls tend to choose education in arts and humanities, law or economics, rarely going to technical universities. Lack of technical background further prevents their access into hi-tech profitable industries.

Business and economic environment

During the interviews, women stated that “Both men and women businesses face generally the same obstacles in starting up, operational management and strategic development. But in an unfriendly environment – mostly men survive”. Similar messages were obtained from the survey, with almost no significant difference in the estimation of barriers was revealed. The main external barriers mentioned were government control (32.2% of female and 29.3% of male owners), administrative burden (44.1% vs. 41.1%) and tax system (33.5% and 30.5%) (Table 4). Almost all barriers were equally mentioned by the respondents except for corruption. Corruption is the only obstacle that differs between men and women, pointed out by 50% of women, while just 12% of men considered it a problem. We interpret it as women being more risk-averse and less likely do bold and dangerous actions in business like bribing. That corresponds to the literature, which finds women more risk-averse than men (Castillo and Freer, 2018; Croson and Gneezy, 2009).

Table 4. Main obstacles and motives for doing business by gender of the owner

Women Men
Main barriers
Government control 32.2 29.3
Administrative burden and legal system 44.1 41.1
Tax system 33.5 30.5
Corruption 49.7 11.8
Human capital 16.1 17.1
Unfair competition 28.5 26.9
Motivation to start-up business
Sudden business opportunity 47.8 42.8
Willingness to earn more 29 34.6
No chance to continue the previous activity 14.5 13.2
Improvement of state’s attitude to entrepreneurs 13 13.2
Possibility to combine work and parenting 13 2.5

Conclusion

The statistical evidence showed that female-owned businesses are smaller in size and grow more slowly compared with male-owned competitors. There are no signs of gender differences in entrepreneurial innovativeness. However, the monetization of implemented innovations is more successful among male-owned companies.

Altogether, the barriers of female entrepreneurship in Belarus are associated with the huge burden of household duties and childcare; hindered access to technical and business education; lack of managerial experience and industry knowledge. The existing exogenous barriers, excessive control, contradictory regulations and unfriendly entrepreneurial ecosystems are seen as additional constraints and contribute to the quality and dynamics of female business.

The obtained results confirm the necessity for adding a gender perspective to SME’s policy support in Belarus as well as for taking it into account when estimating the potential effects of business support programs and policies.

Further research of women entrepreneurship, collection of reliable statistics, comparison of the results with other transition countries are vital. These will give an encouragement to new gender specific initiatives and will contribute to economic growth and innovative perspectives of Belarus.

References

  • Akulava, M. (2016a). Gender and Innovativeness of the Enterprise: the Case of Transition Countries. Working Paper No. 31.
  • Castillo, M. and M. Freer. (2018). Revealed differences. Journal of Economic Behavior & Organization, 145: 202-217.
  • Croson, R. and U. Gneezy. (2009). Gender Differences in Preferences. Journal of Economic Literature, 47(2): 448-474.
  • Noland, M., Moran, T. and B. R. Kotschwar. (2016). Is gender diversity profitable? Evidence from a global survey. Peterson Institute for International Economics. Working Paper No. 16-3.

Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.

Intimate Partner Violence, Norms and Policies

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Violence against women has been called by then UN Secretary-General and Nobel Peace Prize laureate Kofi Annan, “perhaps the most shameful human rights violation. And, it is perhaps the most pervasive.” Although the spread of domestic violence is difficult to quantify precisely, this is uncontroversially an issue worthy of policy concern. As is often the case, the developing world lags behind. What can development cooperation do? A growing body of economic research, including our recent results, shows that improving women’s economic opportunities matters.

It is not easy to put a figure on the prevalence of violence against women. A recent review (Alhabib et al., 2010) reports that “the prevalence of lifetime domestic violence varies from 1.9% in Washington, US, to 70% in Hispanic Latinas in Southeast US.” As the quote shows, most of the currently available studies were conducted in the US or Europe, although the focus on the developing world is rapidly growing. Besides the geographic bias, the nature of data available on the matter further limits the precision of our knowledge. Surveys (used by the vast majority of studies), crime statistics and administrative health data each suffer from different limitations. One detail, though, consistently emerges in the big picture: the largest share of violence against women is perpetrated by a cohabiting partner or other family members, what is commonly referred to as intimate partner violence or domestic violence.

In addition to the human costs, a growing body of research shows that domestic violence has huge economic costs, including the direct costs of health, legal, police and other services. There are also broader social costs, more difficult to quantify. Domestic violence is likely to reduce women’s participation in productive employment and education, and has also been shown to affect the welfare and education of children.

Legislation and policy

While specific domestic violence laws were uncommon just a few decades ago, many countries have, over the past two decades, adopted or revised legislation. In 2008, the United Nations (UN) launched a dedicated initiative advocating for universal ”adoption and enforcement of national laws to address and punish all forms of violence against women and girls, in line with international human rights standards.”

Even though issues of implementation and enforcement are more important than the letter of these laws, it is still crucial that laws are there. In such an area where culture and social norms play a big role, legislation can function as a signal of what a society deems acceptable and coordinate behavior to ultimately change social norms. This is why for example the recent law change in Russia was strongly criticized, regardless of the alleged advantages of the new formulation in terms of practical implementation. [A/N: The reform decriminalized and reduced the punishment for attacks that result in “minor injuries”, as long as they do not happen more than once a year, from two years to 15 days in prison. Proponents claimed that declassifying this form of violence from criminal to administrative offense would lower the threshold for reporting, and avoid misapplication by the police for extortion purposes.]

Besides legislation, a broad range of policies in different areas play a role for the prevalence of domestic violence and the fight against it. The knowledge gaps in terms of prevalence hinder the investigation of the factors that amplify or dampen the incidence of domestic violence, and as a consequence make it more difficult to draw implications for policy strategies. Whatever improves the parity between genders and the status of women in a society is however likely to work in the right direction, at least in the long run. Among the policies with established effects in this direction are legal rights for women (for example in terms of political representation); the introduction of role models (for example through cable TV); an improved balance of economic resources within the household (see Jayachandran, 2015 for an overview of the literature).

Development policy

As for many other areas, developing countries tend to lag behind in this respect. In Sub-Saharan Africa (SSA), domestic violence is considered a barrier to sustainable development, with 36%-70% prevalence (Garcia et al., 2005) and an estimated cost of 1.2%-3.7% of GDP (Duvvury et al., 2013). These estimates take into account a broad range of consequences for women and children. Besides direct and indirect health and life expectancy consequences, distorted outcomes for women include lower autonomy, affecting economic and financial decisions, effectiveness of home production, freedom of movement, education and labor market participation and healthcare decisions. Children are affected by distorted reproductive decisions, for example in regard to birth spacing, resulting in lower birth weights and worse chances of survival, and rearing decisions in general. Still these costs can be thought of as a lower bound, given the conservatism of the methodology and the gross under-reporting of violence. Although the main responsibility for policy lies of course within the country, we might still wonder what the international community can do to help, within the framework of development cooperation.

Aid and domestic violence

Even though the donor community agreed, in Addis Abeba in 2015, on a ”beyond aid” agenda to reach the 17 sustainable development goals (see UN, 2015), the main tool of development cooperation is currently still foreign aid. In recent research with Anders Olofsgård and Evelina Bonnier, we investigate the impact of aid on gender-related outcomes, and among them domestic violence. There are three reasons why we expect an impact of development aid on these outcomes. First of all, there may be a direct effect of aid-financed projects on the intended beneficiaries. Many aid projects have nowadays an explicit component targeting women and girls. Moreover, donors also agreed to gender ”mainstreaming” (Beijing Platform for Action, 1995), which implies that gender concerns should be integrated into all policy and program cycles, and that governments should engage in a dialogue on gender and development. This is because women and girls are seen as particularly vulnerable in situations of poverty and conflict, but also potentially instrumental in the general process of development (Duflo, 2012).

Second, aid projects are typically intended to benefit whole communities, and there are often positive externalities that extend beyond the immediately targeted beneficiaries and beyond the stated objectives of the project. Think for instance of immunization drives against infectious diseases (Miguel and Kremer, 2004). When a big enough group of school children are treated against, for example, intestinal worms, far larger communities are also protected due to the now lower probability of contagion, and also the indirect benefits extend to them. Projects targeting livelihoods and jobs can also increase aggregate demand in the community, benefiting those not directly involved in the projects. The ultimate level of spillover goes through economy-wide growth and development. Research shows that gender relations tend to become more equal with economic development and that women tend to gain more than men (Duflo, 2012).

Finally, beyond economic opportunities, positive spillovers can come through transmission of information and attitudes, changing social norms through personal networks, including both direct beneficiaries and others.

Figure 1. Effect of aid on domestic violence

Source: Berlin et al., forthcoming

Figure 1 is based on our empirical investigation linking the most recent Demographic and Health Surveys (DHS) in Uganda and Malawi to information on the geographical coordinates of aid projects placement, provided by AidData. Men in the areas exposed to aid (which we define to be within a 15 km radius of at least one aid-financed project) are 11% more likely to share the opinion that beating one’s wife is not justifiable, as compared to men not exposed to aid. This difference is even larger than for women (4%). Most importantly, women exposed to aid are less likely to have experienced some form of violence, physical (–3%), emotional (–9%) and in particular sexual (–24%). We think this might be connected to the improved status of the woman in economic terms. In fact, we find much more modest impacts from exposure to specifically gender-targeted projects (examples of which include “Community participation and development”, “Support for vulnerable groups”, “Improvement of outpatient, maternal and child health services”, “Women’s empowerment for peace”, and “Anti-trafficking for women and children”). We also find that aid presence affects labor market participation for women, but do not find this effect from gender-specific aid. This is consistent with the idea that women’s relative status within the household improves as a consequence of better economic opportunities, in this case induced by aid. Evidence supporting this mechanism is piling up, see Aizer (2010), Bobonis et al. (2013), Heath (2014), Anderberg et al. (2016), Hidrobo et al. (2016), to cite just a few. The types of activities that fall under our definition of gender-specific aid, instead, do not seem to contribute in this respect.

Conclusion

Summarizing recent research, the World Development Report 2015 called for development policy to focus on norms and mental models. These are often highly persistent and hard to change. We know that gender-related norms are important for outcomes that deeply affect the lives of women and girls. We do not know a lot about how to change them, but improving the status of women and girls in society seems to be one important piece of the puzzle. Our recent findings about the impacts of aid imply, echoing the WDR 2015, that this should be an important goal for development cooperation.

References

  • Alhabib, Samia; Ull Nur; and Roger Jones. 2010. ”Domestic Violence Against Women: Systematic Review of Prevalence Studies”, Journal of Family Violence, 25, pp 369–382.
  • Aizer, Anna, 2010. ”The Gender Wage Gap and Domestic Violence”, The American economic review. 100(4),1847-1859.
  • Anderberg, Dan; Rainer, H., Wadsworth, J., & Wilson, T., 2016. “Unemployment and Domestic Violence: Theory and Evidence.” The Economic Journal 126.597, pp 1947-1979.
  • Berlin, Maria P.; Evelina Bonnier; and Anders Olofsgård, forth. “The Donor Footprint and Gender Gaps”, UNU-WIDER Working Paper Series.
  • Bobonis, Gustavo J.; Melissa González-Brenes; and Roberto Castro, 2013. “Public Transfers and Domestic Violence: The Roles of Private Information and Spousal Control.” American Economic Journal: Economic Policy 5, no. 1
  • Duflo, Esther, 2012. “Women empowerment and economic development”, Journal of Economic Literature, 50(4), 1051-79.
  • Duvvury, Nata; Callan, A.; Carney, P.; and Raghavendra, S.; 2013. ”Intimate partner violence: Economic costs and implications for growth and development.” Women’s Voice, Agency, & Participation Research Series, 3.
  • García-Moreno, Claudia; Jansen, H. A. F. M.; Ellsberg, M.; Heise, L.; and Watts, C., 2005. ”WHO Multicountry Study on Women’s Health and Domestic Violence against Women: summary report of initial results on prevalence, health outcomes and women’s responses.” World Health Organization. Geneva.
  • Jayachandran, Seema. 2015. “The roots of gender inequality in developing countries.” economics 7.1, pp 63-88.
  • Heath, Rachel, 2014. “Women’s access to labor market opportunities, control of household resources, and domestic violence: Evidence from Bangladesh.” World Development 57, pp 32-46.
  • Hidrobo, Melissa; Amber Peterman; and Lori Heise, 2016. “The Effect of Cash, Vouchers, and Food Transfers on Intimate Partner Violence: Evidence from a Randomized Experiment in Northern Ecuador.” American Economic Journal: Applied Economics 8.3, pp 284-303.
  • UN, 2015. ”Transforming our World: The 2030 Agenda for Sustainable Development.” United Nations – Sustainable Development knowledge platform.

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Traces of Transition: Unfinished Business 25 Years Down the Road?

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This year marks the 25-year anniversary of the breakup of the Soviet Union and the beginning of a transition period, which for some countries remains far from completed. While several Central and Eastern European countries (CEEC) made substantial progress early on and have managed to maintain that momentum until today, the countries in the Commonwealth of Independent States (CIS) remain far from the ideal of a market economy, and also lag behind on most indicators of political, judicial and social progress. This policy brief reports on a discussion on the unfinished business of transition held during a full day conference at the Stockholm School of Economics on May 27, 2016. The event was organized jointly by the Stockholm Institute of Transition Economics (SITE) and the Swedish Ministry for Foreign Affairs, and was the sixth installment of SITE Development Day – a yearly development policy conference.

A region at a crossroads?

25 years have passed since the countries of the former Soviet Union embarked on a historic transition from communism to market economy and democracy. While all transition countries went through a turbulent initial period of high inflation and large output declines, the depth and length of these recessions varied widely across the region and have resulted in income differences that remain until today. Some explanations behind these varied results include initial conditions, external factors and geographic location, but also the speed and extent to which reforms were implemented early on were critical to outcomes. Countries that took on a rapid and bold reform process were rewarded with a faster recovery and income convergence, whereas countries that postponed reforms ended up with a much longer and deeper initial recession and have seen very little income convergence with Western Europe.

The prospect of EU membership is another factor that proved to be a powerful catalyst for reform and upgrading of institutional frameworks. The 10 countries that joined the EU are today, on average, performing better than the non-EU transition countries in basically any indicator of development including GDP per capita, life expectancy, political rights and civil liberties. Even if some of the non-EU countries initially had the political will to reform and started off on an ambitious transition path, the momentum was eventually lost. In Russia, the increasing oil prices of the 2000s brought enormous government revenues that enabled the country to grow without implementing further market reforms, and have effectively led to a situation of no political competition. Ukraine, on the other hand, has changed government 17 times in the past 25 years, and even if the parliament appears to be functioning, very few of the passed laws and suggested reforms have actually been implemented.

Evidently, economic transition takes time and was harder than many initially expected. In some areas of reform, such as liberalization of prices, trade and the exchange rate, progress could be achieved relatively fast. However, in other crucial areas of reform and institution building progress has been slower and more diverse. Private sector development is perhaps the area where the transition countries differ the most. Large-scale privatization remains to be completed in many countries in the CIS. In Belarus, even small-scale privatization has been slow. For the transition countries that were early with large-scale privatization, the current challenges of private sector development are different: As production moves closer to the world technology frontier, competition intensifies and innovation and human capital development become key to survival. These transformational pressures require strong institutions, and a business environment that rewards education and risk taking. It becomes even more important that financial sectors are functioning, that the education system delivers, property rights are protected, regulations are predictable and moderated, and that corruption and crime are under control. While the scale of these challenges differ widely across the region, the need for institutional reforms that reduce inefficiencies and increase returns on private investments and savings, are shared by many.

To increase economic growth and to converge towards Western Europe, the key challenges are to both increase productivity and factor input into production. This involves raising the employment rate, achieving higher labor productivity, and increasing the capital stock per capita. The region’s changing demography, due to lower fertility rates and rebounding life expectancy rates, will increase already high pressures on pension systems, healthcare spending and social assistance. Moreover, the capital stock per capita in a typical transition country is only about a third of that in Western Europe, with particularly wide gaps in terms of investment in infrastructure.

Unlocking human potential: gender in the region

Regardless of how well a country does on average, it also matters how these achievements are distributed among the population. A relatively underexplored aspect of transition is to which extent it has affected men and women differentially. Given the socialist system’s provision of universal access to education and healthcare, and great emphasis on labor market participation for both women and men, these countries rank fairly well in gender inequality indices compared to countries at similar levels of GDP outside the region when the transition process started. Nonetheless, these societies were and have remained predominantly patriarchal. During the last 25 years, most of these countries have only seen a small reduction in the gender wage gap, some even an increase. Several countries have seen increased gender segregation on the labor market, and have implemented “protective” laws that in reality are discriminatory as they for example prohibit women from working in certain occupations, or indirectly lock out mothers from the labor market.

Furthermore, many of the obstacles experienced by small and medium-sized enterprises (SMEs) are more severe for women than for men. Female entrepreneurs in the Eastern Partnership (EaP) countries have less access to external financing, business training and affordable and qualified business support than their male counterparts. While the free trade agreements, DCFTAs, between the EU and Ukraine, Georgia, and Moldova, respectively, have the potential to bring long-term benefits especially for women, these will only be realized if the DCFTAs are fully implemented and gender inequalities are simultaneously addressed. Women constitute a large percentage of the employees in the areas that are the most likely to benefit from the DCFTAs, but stand the risk of being held back by societal attitudes and gender stereotypes. In order to better evaluate and study how these issues develop, gendered-segregated data need to be made available to academics, professionals and the general public.

Conclusion

Looking back 25 years, given the stakes involved, things could have gotten much worse. Even so, for the CIS countries progress has been uneven and disappointing and many of the countries are still struggling with the same challenges they faced in the 1990’s: weak institutions, slow productivity growth, corruption and state capture. Meanwhile, the current migration situation in Europe has revealed that even the institutional development towards democracy, free press and judicial independence in several of the CEEC countries cannot be taken for granted. The transition process is thus far from complete, and the lessons from the economics of transition literature are still highly relevant.

Participants at the conference

  • Irina Alkhovka, Gender Perspectives.
  • Bas Bakker, IMF.
  • Torbjörn Becker, SITE.
  • Erik Berglöf, Institute of Global Affairs, LSE.
  • Kateryna Bornukova, Belarusian Research and Outreach Center.
  • Anne Boschini, Stockholm University.
  • Irina Denisova, New Economic School.
  • Stefan Gullgren, Ministry for Foreign Affairs.
  • Elsa Håstad, Sida.
  • Eric Livny, International School of Economics.
  • Michal Myck, Centre for Economic Analysis.
  • Tymofiy Mylovanov, Kyiv School of Economics.
  • Olena Nizalova, University of Kent.
  • Heinz Sjögren, Swedish Chamber of Commerce for Russia and CIS.
  • Andrea Spear, Independent consultant.
  • Oscar Stenström, Ministry for Foreign Affairs.
  • Natalya Volchkova, Centre for Economic and Financial Research.

 

Does Gender Matter for the Innovativeness of SMEs?

This policy brief summarizes the results of an on-going research project on the gender aspect of companies’ innovativeness in transition countries. The aim of this work is to examine whether there is a gender gap in innovative behavior within the sector of small and medium-sized enterprises (SMEs). The results suggest that the propensity to innovate is higher among companies with a presence of a female owner.   This finding preserves for 5 measures of innovativeness. Thus, female involvement in business might be beneficial for the innovative sustainable development of economy.

The role of small and medium-sized enterprises (SMEs) has increased lately and they are considered one of the main engines of economic growth (Radas and Bosic, 2009). Research on transition economies and development has emphasized the need for strong a SME sector, since it often acts as the backbone of the economy (Lukasc, 2005) and is the largest contributor of employment (Omar et al., 2009). Another important channel through which the SME sector contributes to development is through their innovative activities. Sustainable economic development requires competitive and successful industries. Being innovative is one way to achieve this goal. However, the innovativeness of sectors and industries depends not only on the actions of the largest companies, but also on the SME sector and individual entrepreneurs. Indeed, the latter are often argued to be more dynamic and more ambitious (Chalmers, 1989; Li and Rama, 2015).

The decision to follow an innovative strategy often depends on the company’s leader, their experience and other managerial characteristics. However, the experience of the leader is not the only factor affecting managerial actions – gender also appears to matter (Daunfeldt and Rudholm, 2012). In the absence of clear answers and knowledge about female managerial characteristics, including their innovativeness (Alsos et al., 2013), it is difficult to evaluate their role in modernizing the business society and to distinguish their competitive advantages or disadvantages over male managers and business owners.

The role becomes even more ambiguous for the transition, post-communist economies. The labor market under USSR officially provided equal rights to women. However, in practice women were treated differently than men. While women often had to do the same work as men, the patriarchal society remained with men being regarded as the main decision makers, and women being fully responsible for housework and childcare. This can explain the low presence of women in top-managerial positions and women’s weaker business ties and networks (Welter et al., 2004).

The question of gender and innovation in entrepreneurship has recently starting to attract attention. Earlier, innovativeness was strongly connected and associated with high-tech companies. Thus, innovation research mostly focused on technology-based and capital-intensive industries (Dauzenberg, 2012; Marlow and McAdam, 2012). As a result, innovation behavior in less capital-intensive SMEs was almost entirely overlooked. This can also explain the lack of focus on gender, as men usually dominated the capital-intensive industries (Ljunggren et al., 2010).  In an ongoing research project, I am trying to expand the understanding of gender differences in innovation and SME entrepreneurship with a focus on transition economies and the CIS block in particular.

The idea is to estimate owners’ and CEOs propensity to implement innovations in the organization. The specification of the model follows the literature and uses a probit technique that allows for an estimation of these propensities while taking into account other influencing factors and individual characteristics of firms, their owners and CEOs, which likely affect innovative decisions. The data I use come from the 5th wave of the Business Environment and Enterprise Performance Survey (BEEPS) conducted in 2012-2013. The final dataset covered 5254 SMEs from 30 European and East Asia countries.

The main variable of interest is the innovativeness of the enterprise, proxied by 5 different indicators. The measures of implemented innovative activities are: 1) whether the firms introduced a new product or service during the last 3 years; 2) whether there was any new production process implemented; 3) whether there were any spending on research and development; 4) whether were was an introduction of a new marketing strategy and method; and 5) whether an enterprise implemented new methods in operational management. The usage of 5 indicators instead of one allows me to see whether there is any specific feature of innovativeness that differs by gender.

The list of control variables covers information on the gender of the CEO and owners, number of years of experience of the CEO, age of the firm, type of ownership, focus on internal and external markets, as well as the usage of foreign technologies and certification. I also have information on the share of skilled labor force, the share of females in the organization, and whether the organization bears additional costs on external consulting services and training of employees. Information on industry, country, size of the organization and type of residence is also available.

Unfortunately, the data lacks information on the number of owners, which will prohibit me from estimating the clear gender effects and limits the analysis to the effect of gender diversity among owners.

The obtained results (see Table 1) show that having a female as the only, or one of the, owner(s) increases the propensity of going into uncertainty and implementation of a new good/service by 4.5% in the CIS region and 6.7% in the non-CIS block. However, the effect of having a female CEO is insignificant. This finding contradicts the literature on gender differences in the willingness to take on risk (Wagner, 2001; He et al., 2007; Eckel et al., 2008; Croson and Gneezy, 2009) that mostly demonstrates that women, on average, are more risk-averse than men.

A similar effect is observed for the implementation of a new business process or marketing strategy. The only insignificant difference is the spending on R&D in CIS countries and new managerial methods in non-CIS block. However, these measures of innovativeness raise doubts regarding its applicability for SME sector. A shift from high-intense productions towards services makes it less useful to spend enormous sums of money on technological research. Instead, other innovative actions like the development of human capital are of greater importance.

Table 1. Propensity to innovate

Akulava_tab1Source: Author’s own estimation.

Conclusion

The results show that having a female owner or gender diversity in the ownership structure positively affects the propensity of the organization to follow innovative behaviors and strategies. Therefore, promoting female entrepreneurship and gender equality in ownership seem positive for increasing the innovativeness of companies, and the economy in general, in both the CIS and non-CIS block.

References

  • Alsos, G.A., Hytti, U., and Ljunggren, E. 2013.Gender and Innovation: State of the Art and a Research Agenda.International Journal of Gender and Entrepreneurship, 5(3):236-256.
  • Chalmers, N. 1989. Industrial Relations in Japan: The Peripheral Workforce. London: Routledge.
  • Croson, R. and Gneezy, U. 2009. “Gender Differences in Preferences”.Journal of Economic Literature.Volume 47, #2.
  • Daunfeldt, S., O., and Rudholm, N., (2012). Does gender diversity in the boardroom improve firm performance? Department of Economics, Dalarna University, SE-781 88 Borlänge, Sweden; and HUI Research, SE-103 29 Stockholm, Sweden.
  • Dautzenberg, K. 2012. Gender differences of business owners in technology-based firms.International Journal of Gender & Entrepreneurship,4:79–98.
  • Eckel, C. and Grossman, P. 2008. “Men, Women and Risk Aversion: Experimental Evidence”. Handbook of Experimental Economic Results.Elsevier.Volume 1, #7.
  • He, X., Inman, J.J. and Mittal, V. (2007), “Gender jeopardy in financial risk taking”, Journal of Marketing Research, 44: 414-24.
  • Li, Y., and Rama, M. 2015. Firm Dynamics, Productivity Growth, and Job Creation in Developing Countries: The Role of Micro- and Small Enterprises. The World Bank Research Observer, 30: 3-38.
  • Ljundggren, E., Alsos, G.A., Amble, N., Ervik, R., Kvidal, T., Wiik, R. 2010. Gender and innovation: Learning from regional VRI projects. Nordland Research Institute, Norway.
  • Lukacs, E. 2005. The economic role of SMEs in world economy, especially in Europe. European Integration Studies, 4(1): 3-12.
  • McAdam, M. and Marlow, S. 2008.The Business Incubator and the Female High-Technology Entrepreneur: A Perfect Match? Paper presented at the 2008 International Council for Small Business World Confrence, recipient of the 2008 Best Paper Award for Women Entrepreneurship.
  • Omar, S. S., Arokiasamy, L., & Ismail, M. 2009. The background and challenges faced by the small and medium enterprises. A human resources development perspectives. International Journal of Business and Management, 4(10): 95-102.
  • Radas, S., and Božić, Lj. 2009.The Antecedents of SME Innovativeness in an Emerging Transition Economy. Technovation, 29: 438-450.
  • Wagner, M.K. (2001), “Behavioral characteristics related to substance abuse and risk-taking, sensation-seeking, anxiety sensitivity and self-reinforcement”, Addictive Behaviors , Vol. 26, pp. 115-20.
  • Welter, F., Smallbone, D., Isakova, N., Aculai, E. and Schakirova, N. 2004. Social Capital and Women Entrepreneurship in Fragile Environments: Does Networking Matter? Paper presented at Babson College-Kauffman Foundation Entrepreneurship Research Conference, University of Strathclyde.

Gender and Development: the Role of Female Leadership

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This policy brief reports on a discussion of the role of female leadership in development held during a full day conference at the Stockholm School of Economics on June 16, 2014. The event was organized jointly by the Stockholm Institute of Transition Economics (SITE) and the Swedish Ministry for Foreign Affairs, and was the fourth installment of Development Day – a yearly development policy conference. It is well known that women fall behind men on many markers of welfare and life opportunities, both in developed and developing countries. For most indicators, though, such as education and labor force participation, both the absolute and relative position of women tend to improve with economic development. However, in some areas the beneficiary effect of raising incomes is less clear. Access to leadership positions and decision-making roles are examples of such areas. To discuss this question, the conference brought together a distinguished and experienced group of policy oriented scholars and practitioners from government agencies, international organizations, civil society and the business community. 

For Some Mothers More Than Others: How Children Matter for Labor Market Outcomes When Both Fertility and Female Employment Are Low

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Authors: Krzysztof Karbownik and Michal Myck, CenEA.

Wide spread entry of women into the labor force has been one of the most pronounced socio-economic developments in the 20th century, and high levels of female employment are crucial from the point of view of continued economic growth and financial stability of many welfare systems (Galor and Weil, 1996). At the same time, demographic changes determined by the current and future fertility levels will play a vital role in shaping these developments and will affect the costs of social programs. Given the potentially strong link between female employment and family size, it seems that understanding the relationship between the two ought to be at the heart of policy discussions, especially in countries that are characterized by both low fertility and low female employment. In particular, in light of rising unemployment in low-fertility countries, which have been most severely affected by the economic crisis such as Greece, Spain and Latvia, our findings may serve as a guide with respect to the relationship between fertility and labor supply in an environment, which will be more common in Europe in the near future.