Today we are please to have the following guest post written by Heidi Crebo-Rediker, a CFR Senior Fellow. Prior to joining CFR, Heidi served as the State Department’s first chief economist.
It was likely just a coincidence that President Obama picked the week of the IMF Annual Meetings in Washington to announce his selection of Janet Yellen as the next chair of the Federal Reserve. But the choice of Ms. Yellen as the first woman to serve in what has become the most important position in the global economy underlies one of the major themes of this year’s gathering of the global financial policy-making elite. While it is not new for the IMF meetings to focus on how to spur and sustain balanced and inclusive growth, what is different is that this year, in addition to the more traditional prescriptions, the IMF has something to say about an answer that is right in front of us: women.
Compelling work from the IMF, and sister institutions like the World Bank and OECD, shows that increasing women in the workforce drives economic growth. The OECD estimates if their member countries saw full convergence of men and women in their labor forces, these countries would benefit from an overall increase of 12 percent in GDP within the next 20 years.
IMF management, staff and the Executive Board got a serious boost to advance the agenda of women as a driver of growth, or “Womenomics”, from none other than Secretary Hillary Clinton last week. She addressed crowds of hundreds at the IMF’s headquarters, relaying her experience on women’s engagement in the global economy in a conversation with Christine Lagarde. Clinton praised the work already done by the IMF, but encouraged deeper engagement on the issue of women as a driver of growth with all member countries, integrating gender into the IMF’s mainstream business.
Secretary Clinton’s timing was perfect. The IMF is considering how and where it can most effectively integrate gender into macro-economic assessment. A new IMF publication Women, Work and the Economy: Macroeconomic Gains from Gender Equity, suggests a number of ways the IMF could advance gender-driven growth consistent with the rest of the good work they do. The Fund should take this opportunity to go the next step: to design the best policies and practices, create the metrics for success and hold countries to account in its annual assessments---for all IMF member countries.
And the IMF is just the “man” for the job. Addressing barriers to women’s labor force participation is a natural extension of the dialog the IMF already has with member countries on inclusive growth, fiscal and budget issues and labor markets. That means the IMF is well placed to systematically ensure that inclusive growth includes women, and discussion of women’s economic participation becomes a standard and serious component of economic assessment, from tax policy, to financial policy, to spending policy, and more.
Japan provides an interesting case for Womenomics---and its leadership is now embracing a gender-driven growth agenda. Japan’s labor force has fewer women participating in it than most of its OECD peers. When Prime Minister Abe took the podium at the recent UN General Assembly, he championed “Womenomics” as his next move to revitalize Japan’s economy. Given the prominence placed on the world stage---Abe is taking this particular arrow of Abenomics seriously.
Abe told the UN audience that this is no longer a matter of choice. With the demographic challenge Japan faces in the decades ahead, the Prime Minister is right. He aims to create the right conditions to boost the percentage of women in the labor force from 68% to 73% by 2020, just in time for the Tokyo Olympics. This will not be easy. But with some good policy choices and decent implementation, Japan has the opportunity to take an OECD lagging indicator and turn it into a force for renewal.
“Womenomics” in Japan was helped along the way by the IMF. Madame Lagarde herself weighed in during her visits to Tokyo, personally advocating on this issue. But there are many other countries that can benefit from the same engagement Japan has seen. While gender-driven policy advice is not yet considered standard fare from the IMF, it is certainly becoming more so these days as growth challenges loom large.
Much good work has been done to further objectives of women at home and around the world, but there is more to do. Ultimately, the case will be made, and won, when leading institutions like the IMF spearhead, and more leaders like Prime Minister Abe embrace, the right policies to encourage equal opportunity for women in the economy.