A Conversation With Christine Lagarde

Wednesday, December 12, 2018
Issei Kato/Reuters
Christine Lagarde

Managing Director, International Monetary Fund

James Manyika

Chairman and Director, McKinsey Global Institute, and Senior Partner, McKinsey & Company, Inc.; Member, Board of Directors, Council on Foreign Relations

Introductory Remarks
Rachel B. Vogelstein

Douglas Dillon Senior Fellow and Director of the Women and Foreign Policy Program, Council on Foreign Relations

Despite the positive relationship between women’s labor force participation and GDP growth, legal barriers undermine female economic potential in every region of the world. Gender-based legal restrictions exist in almost 90% of nations, ranging from limitations on property ownership to prohibitions on signing contracts. Christine Lagarde discusses the economic implications of gender inequality under the law and outlines policy recommendations to accelerate women’s economic participation.

For more information, visit the Women's Workplace Equality Index

VOGELSTEIN: Good morning. Welcome to the Council on Foreign Relations. My name is Rachel Vogelstein. I lead the Women and Foreign Policy Program here at CFR, which analyzes how elevating the status of women and girls advances U.S. foreign-policy objectives.

On behalf of Richard Haass, the president of the Council, it is my great pleasure to commence our first CFR Symposium on Women and the Law. I want to begin by extending my gratitude to our esteemed speakers for joining us this morning. I also want to thank all of you for participating today, and welcome everyone tuning in to our live cast. And I’d like to extend a special appreciation to those of you who traveled here from out of town. We are very glad to have you with us.

Today’s Symposium on Women and the Law is focused on an issue that has been part of our national and global dialogue for well over a year—how to level the economic playing field for women.

In capitals and boardrooms, in the workplace and on the streets, through hashtags and social media, even around the proverbial water cooler and dinner table, good men and women alike have grappled with the persistent barriers that hamper women in the workplace in the 21st century, as well as the question of how to address them.

To help answer this question, scholars in the Women and Foreign Policy Program here at the Council have created several new tools to assess the status of women in the workplace around the world and explain why leveling the legal playing field for women is so critical to economic prosperity and stability.

To that end, today we are launching the Women’s Workplace Equality Index, which is the first-ever global ranking of countries based on gender equality in the workplace. Under CFR’s gender-equality ranking, which draws upon World Bank data, Australia comes in first. Canada is second. Mexico is fifth. And notably, the United States is not even in the top ten, falling at 20th. At the bottom of the list are Iran, Sudan, Qatar, Syria, and Yemen.

The index highlights the pervasive nature of legal barriers to women in the workplace, finding that over one hundred countries restrict the kinds of jobs that women can hold, that fifty-nine countries lack any legal protection against sexual harassment in the workplace whatsoever, and not a single nation of 189 covered has a level legal playing field for women at work.

Today we are also issuing a new report on Women and the Law, which analyzes the five areas in which the greatest obstacles to women’s economic participation endure: financial inclusion, national identification law, land rights, workplace discrimination, and family law.

This report reflects field research conducted by CFR scholars in Tanzania, Nigeria, and Pakistan. And it covers many of the themes we’ll discuss in our panel sessions today.

So our data confirm that legal barriers to women’s workforce participation persist everywhere in the world. But why do these barriers to women’s equality in the workplace matter? Our new interactive report, entitled Growing Economies Through Gender Parity, outlines the economic states, visualizing data from the McKinsey Global Institute showing that closing the gender gap in workforce participation could add a staggering $28 trillion to global GDP.

Both advanced and developing economies alike stand to benefit if women are able to participate in the labor force to the same extent as men. The U.S. economy could grow by 19 percent, China’s by 20 percent, Mexico’s by 43 percent, and India’s by a remarkable 60 percent. You can find each of these new reports in the materials at your seats and online at CFR.org.

The bottom line from our research is this: In the 21st century, nations cannot get ahead economically by leaving half of their population behind. Leveling the playing field affords an opportunity to take stock of the barriers that persist for women at work, to explore policy approaches in both the public and private sectors, and to ask hard questions about the way forward. And we have four terrific panels to accomplish just that.

Our keynote session will feature a conversation with IMF Managing Director Christine Lagarde to explore the economic implications of gender equality under the law. Our second session, with World Bank CEO Kristalina Georgieva, will analyze financial inclusion in the digital age. Our third session will examine the issue of workplace discrimination in the era of an increasingly global #MeToo movement. And our final session will assess efforts to improve women’s economic participation through family-law reform, perhaps the most contentious area of the law for women.

We have a stellar roster of panelists, and we’re grateful to each of them for sharing their expertise with us.

Before we begin, a special word of thanks goes to the Bill and Melinda Gates Foundation, which has generously sponsored today’s symposium and our work on women and economic growth. In particular, I want to thank Rosita Najmi and her colleagues for their leadership and continued support for the Council’s work.

I’d also like to thank my Women and Foreign Policy Program colleagues, whose scholarship has paved the way for our discussion today: Senior fellows Jamille Bigio, who led development of our new Workplace Equality Index; Meighan Stone, who is studying the global implications of the #MeToo movement; and Gayle Lemmon, Catherine Powell, and Carrie Bettinger-Lopez, who contributed to the materials that we’re releasing today.

I’d also like to thank the extraordinary CFR team for making this symposium possible, including Stacey LaFollette, Kayla Ermanni, and Carrie Bueche, as well as the outstanding Rebecca Turkington, Alexandra Bro, and Rebecca Hughes of the Women and Foreign Policy team.

Finally, before we get started, I’d like to remind everyone that today’s conversation will be on the record.

With that, please join me in welcoming to the stage the honorable Christine Lagarde and James Manyika. Thank you very much. (Applause.)

MANYIKA: Well, good morning, and welcome to this keynote session of the Symposium on Women and the Law. And the topic for this discussion is Leveling the Economic Playing Field.

I’m James Manyika. I’m the chairman of the McKinsey Global Institute and also a member of the board of the Council on Foreign Relations. And it’s my distinct honor—and I think it’s quite fitting that we have Christine Lagarde here to discuss this. I think it’s worth—I mean, she’s obviously very well known to all of you, but I think it’s worth noting that you were the first woman managing director of the International Monetary Fund. And before that, she was also the finance and economic minister in France for many years. So it is really a real pleasure to have this conversation with you.

I thought where we might start is to actually take an economic view to all these questions. And so when we talk about an uneven economic playing field, what are we talking about? What are the elements of inequity or a lack of parity when it comes to women and the economy?

LAGARDE: Thank you, James.

And good morning to all of you.

One thing that you missed out in my resume, which is actually of interest to that room, is that I was also for many, many years a lawyer—(laughter)—and very much part of that community. I was also in my firm—at Baker McKenzie, I was the first managing partner.

So I want to disclaimer first. Although head of the International Monetary Fund and surrounded by a whole bunch of terribly talented economists, a lawyer is always a lawyer. (Laughter.) So that’s one.

Number two, if I may, how many of you in this room are lawyers? OK, that’s a pretty sizable number. How many in this room are partners in their respective law firm?

MANYIKA: Two. Wow. I just see two hands.

LAGARDE: OK. How many are managing partners in their respective law firms?

OK, I rest my case. (Laughter.)

I hope things can continue to change as they had for a period of time. But I’m afraid—I looked at numbers from the ABA and the IBA, thanks to my general counsel, who is a woman. Rhoda, thank you. And the numbers didn’t look that great. And there is a bit of backtracking in the profession that I’m a little bit worried about, because—and I come to your question—there is obviously a moral-philosophical case to be had concerning women’s access, parity, equality of opportunity, income, and blah, blah, blah, blah, blah. And I’m the daughter of the—(inaudible)—civilization, and I could plead that case. But I’m not going to.

I just want to look at the economic data that we have. And whether you look—and thank you to the Council on Foreign Relationships (sic). You did a fabulous job. And I’m very pleased that under your leadership we are looking at those issues.

There is an obvious case for making sure that women have equal access to education—primary, secondary, tertiary—equal access to the job market, equal compensation for equal jobs that they do. And that is reflected in numbers. It’s very, very clear.

Let me give you—because many of your numbers are right, so I’m not going to repeat them. They—first of all, I think there is a distinction between advanced economies, generally put together under the OECD countries, and then you have the middle-income countries and you have the low-income countries. And whether you measure the female labor force participation or whether you measure the compensation, in all three instances of countries you have a significant gap.

So women access the labor market less so than men. Women receive less compensation than men. And that is true across the board, in advanced, in middle-income, and in low-income countries. It is actually more so the case in middle-income countries.

So the gap is, on average, in the OECD countries at about 16 percent when it comes to female labor force participation. It’s much higher than that, around 26 percent, in the middle-income countries. And it’s not that high in low-income countries, but what we measure there is uncertain because there is a mass of informal and informality in their economy, which makes the calculation a bit difficult. And that is not to mention the unreported, unaccounted-for, and yet terribly important work that is discharged generally by women. And that has to do with work at home; work to carry the water, literally. You know, I’m not just saying carrying the water, but literally doing that. So the gap is very significant.

If you look at compensation now, on a global basis—so you take into account all countries and, you know, the entire population, working population—you’re talking about a difference of compensation of 50 percent—five-zero. That is huge. Now, you will say 50 percent. What is she talking about? Fifty percent on a global basis.

If you look then at advanced economies, it’s much lower than that. I have to look at my numbers, not to give you any wrong ones in case you want to report it, but it is 16 percent. So, sorry, in F—female labor force participation, OECD countries, 14 percent; and in compensation, 16 percent. Those are the differences that we’re talking about.

Now, does it matter? Well, yes, it does matter. It does matter enormously, because I think if you—in a way, the worst-case example, where there is a gender, female labor force participation, gap of 30 percent, assume—and all that is by way of modelization. It’s not real-life, you know, empirical evidence. It’s modelization because that’s what we’ve got to play with.

But if you close that gap entirely and if you have the same participation in the labor force for both men and women, the overall GDP of that community, a nation in that particular case, would increase by 25 percent. So close the gap of 30 percent, equal 25 percent increase in the GDP.

I have yet to meet a head of state, a head of government, or a finance minister—most of them will be men, don’t worry—who say to me, I am not interested in additional growth. I am not interested in making the cake a bit larger so that I can allocate it a bit better. So there is an obvious economic argument in increasing the size of the economy in order to then determine what policies will be applicable. So that’s really obvious.


LAGARDE: And, by the way—one more thing—(laughter)—sorry—because that’s not the only thing it does. Many of you have heard the debate, particularly in light of what’s happening in France at the moment, about excessive and rising inequalities. The fact that you close those gaps, both in terms of female labor force participation and in terms of compensation, mathematically actually reduces the inequalities. That’s number one.

Number two, observations that we’ve made, looking at the 189 membership that we have in the IMF, is that it also leads to a diversification of the economies.

So on those two accounts, as well—because we know that non-diversified economies are very vulnerable. If you only depend on one single big—say, oil, for instance, or copper or, you know, some of those commodities—if you don’t diversify, if you don’t move into services promptly, you’re going to be at risk. So bringing women, reducing those two gaps, actually leads to that.

MANYIKA: Well, you talk quite a bit about labor force participation rates and the inequity and lack of parity there, but you’ve also—in other settings I’ve heard you talk about other aspects of inequality, things like access to capital, access to technology, things that enable women to participate more fully in the economy. Say a little bit more about that. How important are those other economic access inequities?

LAGARDE: Well, I’ll say a little bit, but I don’t want to say too much because my friend Kristalina is going to talk about financial inclusion, and on that subject I want to leave the ground to her, and they’ve done superb work in that respect.

I’ll just say one thing because it’s a special research paper that we recently published which tries to examine what the impact of the future of work—understood as a very broad concept of impact of technologies at large, from artificial intelligence, to data mining, to robotization, and on, and you put it all together—and the compounded effect of that is bound to transform jobs, to remove some jobs, to affect the way in which is discharged and services are provided.

If you try to anticipate the impact that it will have on a gender-desegregated basis, you realize very quickly that women are going to be more impacted than men and by significant account because you realize—and I know that McKinsey has done some great studies on that as well, but you realize that 11 percent of female jobs around the world are going to be significantly affected, if not removed, when 7 percent of men’s jobs will be equally—either affected significantly or just removed. So that’s a major change.

How many jobs does it mean—away from percentages? It means 28 million female jobs in those thirty countries that are studied in that particular study. If you then extrapolate to the entire membership, you are talking about 280 million jobs that are either significantly affected, cannot be discharged without massive training and adjustment, or you are talking about jobs gone.

Now people will say, why is that? Are women that stupid? No, don’t need to actually argue that point, but it’s simply because in many of those economies, women tend to discharge those routine, repetitive tasks that are much more easily automated or substituted by the new technologies that are coming to the markets—that’s all there is about it—which calls for policies.

MANYIKA: Well, let’s come—I mean, you made a very compelling argument and case for why this makes economic sense, why we should have more parity and participation and so forth. Why do you think it’s so hard? Because when I look at countries that do need economic growth, whether it’s countries in Europe or even the United States, developed, developing economies, surely there should be enough momentum to do something about this. What are the barriers, do you think? Why is this so difficult?

LAGARDE: I’ll just—this is a personal assessment of mine. I think that what we are seeing in terms of women’s role in our economies is not less than revolutionary, and revolutions are difficult to swallow.

Now I’ll say two things. One is—having many lawyers in the room I want to make that point. There are multiple legal barriers to the inclusion of women on a parity basis, and again, tribute to the World Bank. The World Bank every two years produces a study of the legal discriminations that apply around our respective memberships. And we’ve done some sort of digging into those discriminations. Eighty-eight percent of countries around the world include in their constitution, in their law, in their executive orders, discriminations against women.

OK, once you have said that you have said not much because you need to dig deep into what kind of discriminations are we talking about. So you have the combination of constitutional principles—whether you are talking about civil rights, whether you are talking about right to ownership, whether you are talking about—you then go into family law as well. Inheritance is a huge, big package of discrimination.

And I want to celebrate here for second Tunisia because Tunisia, two weeks ago, has introduced in parliament a law that would equalize the status of men and women in case of passing away of the parents so that brothers and sisters can inherit equally. This is fiercely debated by the Islamist party in Tunisia on the basis that a man equals two women and therefore the inheritance should be appropriately and proportionately differentiated.

So you have in many developing countries, particularly in sub-Saharan Africa—an interesting phenomenon actually from a legal point of view—which is that many of the old Spanish or French civil codes or soft laws as a result—there were some decrees that were taken at the time of colonizations and sometimes decolonization as well—which actually introduced and have maintained in those legislations discriminations against women. A decree from 1954 that was put in place in many of the ex-French colonies actually still to this day requires that the husband consent to the opening of a bank account for a woman.

It seems like—well, I remember when I was a little girl—it doesn’t make me any younger, but anyway—(laughter)—that’s OK—my mother had to do that. When she wanted to open a bank account, my father had to consent, and for a few years, I could see them both signing the check because they had—there were restrictions in France to prevent that.

So, bottom line, there are multiple legal discriminations around the globe on all those issues—economic access, inheritance—and you can understand the consequences. If a woman is not entitled to either own property or to inherit sufficiently, then she doesn’t have the collaterals that will be needed in order to secure a loan assuming she is entitled to access to a loan. So that really matters. And it—when it changes—when it changes it makes a difference.

We did a study back in 2015. We haven’t redone it on the basis of the latest figures of Kristalina, but in 2015 we looked at all those countries that had those restrictions on the past, and we tried to see whether there was a difference as a result of a change. And in 50 percent of those countries that actually implemented those changes, we realized very quickly that there was within five years of the constitutional, or soft law, or discriminatory legal basis—there was a difference in female labor force participation. That is the case very clearly in countries like Namibia, in Peru, in Malawi, and various others.

MANYIKA: But I think it’s quite easy to paint this as a challenge for developing economies. You still have legal restrictions, even in advanced economies like the United States and others, even in the tax code.

Talk a little bit more about some of the challenges that you see in some of developed advanced economies like the United States.

LAGARDE: Well, in the tax code there is one that is just in our face which actually applies to countries like Germany or France or, you know, a few others, which is that a tax—a tax unit where you assess whatever, you know, personal income tax you want to assess—a tax unit comprises a couple. So taxpayers are not individuals; they are a household comprising the two spouses. And guess what? Marginally most affected is going to be the, quote, unquote, secondary earner, and that is invariably the woman.

So just by changing that and by turning the tax unit into a person rather than a family unit would actually eliminate that implied discrimination for those households that actually pay taxes.

MANYIKA: Right. You know, well, one of the things that I found quite fascinating about a lot of the studies that you’ve done and that the IMF has done is to show that it’s not just about parity; in fact, the diversity in itself is also valuable when you think about the diverse skills, and profiles, and capabilities that diverse teams bring to—not just to companies, but also to the economy.

And I’m quite curious about you think about that—that it’s not just about getting to parity, but leveraging the diversity of teams and organizations as well.

LAGARDE: I’m not sure that we have actually done some research paper on that, but it’s—you know, in a way, that’s my life, so I don’t find it surprising because I—you know, I grew up with Baker McKenzie which was, at the time, the most diverse firm you could ever think, where, you know, equal right to all partners whether you sat in Rome, or New York, or in Beijing.

And the IMF is Babylon. I mean, you have all languages, all nationalities, and we try to enforce diversity. And we have targets by gender, by countries, by groups of countries, by education—by educational background. And we measure our performance against those thresholds.

And I’m not claiming that, oh, we’ve made it; we are at full parity. No, we still have a way to go. And I don’t—I would never trumpet success in that respect.

Can I come back to one topic, because—


LAGARDE: —now that you made me think about the latest research. There is one interesting one which I think would be of concern to some. We very—I very often hear the case that if you promote women, if you give them equal access and if you push the labor force participation using quotas, targets, segmented targets, and all the rest of it, it’s going to discriminate against men, OK.

Now, we did—and actually it was driven by one of our men researchers, but we did a study on the actual economic impact of reducing the female labor force participation, of which those numbers that I’ve mentioned here result. But he went further into that to actually try to identify the female factor.

And I know that there are two schools of thoughts. And I stand on the side of those who think that each gender actually brings characteristics, if not specific, and maybe not naturally driven, but characteristics that are gender-determined. That’s where I stand. I know there is the other current, and I respect them, and we can have a debate forever about it.

But his study was, I think, premised on that basis. And the study really tried to identify what was the economic impact of that—those particularly gender-determined characteristics. And the conclusions of that study are that there is an added impact, because when you add an additional full-time equivalent, irrespective of gender, you get an up. If you add a full-time equivalent that is gender-distinct and begins to close the gap, you bring added value that respect in increased productivity.

And that increased productivity—everything being normal in the economy, at least—brings added revenues, not just for those that raise the productivity, but to all genders. So as a result of that, men as well as women typically receive higher wages. That’s assuming economic rules operate. Then you have all the other principles of stakeholders and how much you distribute to your shareholders and how much you keep within and reallocate. That’s another debate. But on pure economics, increased productivity, brought about by the characteristic determined by gender, benefit both men and women. So to those who say, oh, men will be disadvantaged, no, not true.

MANYIKA: Yeah. No, I actually found that research fascinating because it looked, I think, at the—you know, the elasticity of substitution and the—

LAGARDE: Yeah. I tried to stay away from those words, because they are so—(laughter)—

MANYIKA: Right, which is fascinating.

LAGARDE: —for lawyers.

MANYIKA: But I think you also found—one of the other things that I found interesting was the observation that, in fact, as the economies move towards more services-oriented economies, that also—that reallocation of sectors also benefits the economy. And women tend to be much, much more—the labor-participation rates for women in the services sector tend to be much, much higher.


MANYIKA: But I’m curious. I mean, beyond what you’re doing in the IMF itself as an organization, I’m just curious, as somebody who spends a lot of time in policy conversations and trying to influence and help people improve their economies, what are you doing as the IMF—as you talk to world leaders or business leaders, what are you doing to try and help address some of these challenges?

LAGARDE: Well, first of all, it’s a little bit new in the organization. And it took me a few years to convince the board of the IMF that actually gender economics could be macro-critical. It’s only 50 percent of the population I’m talking about. (Laughter.) But it took a while.

The World Bank was much better at doing it and is excellent at focusing on those issues. And I remember vividly the annual meeting where Bob Zoellick actually had women in various corners of these annual meetings to showcase the voices of women.

So at the IMF it’s not that frequent. I think we are at a stage where it’s now really regarded as macro-critical. And we’ve introduced it at three levels, and I’ll go through those three.

One is—because we do—we have three business lines. We do macroeconomic surveillance, so we audit economies around the world. That’s consented by all countries. It’s part of the contract. Second, we do technical assistance. And third, we do financial support. We never give grants. We give short-term loans in order to take countries out of their misery when they have balance-of-payment major crisis. So those are the three lines.

If you look at those three, in surveillance it’s not part of the normal surveillance process. We piloted that through 39 countries. It’s now streamlined; mainstreamed, rather. And wherever it’s macro-critically relevant—in other words, we’re not going to do it in Norway, in Denmark, in Finland, because we have to use our resources where it’s going to be relevant and make the case—but in other countries we’re going to have that as part of the surveillance, and we’re going to look at the economic impact of discrimination, lack of access to finance, inability of women to do this, that, and the other. That’s number one.

And we do give those—for instance, the tax advice that I’ve just mentioned, it was in the 2018 audit that we did of Germany. Change your tax system. In the 2018 audit of the U.S. economy, we said it’s maybe about time to have a real maternity leave, because you are one of the outliers in the OECD countries with no federal maternity leave, so to speak. So that’s what we do there.

Technical assistance. We now provide a lot of what we call gender budgeting technical assistance so that countries, when they put their budget in place, instead of doing that blindly, they do it thinking, OK, is this particular fiscal policy going to help or hinder women? And as a result, if there is a determination within that government to actually give access to women, then focus on what will have positive impact.

And the third one is whenever we have a lending arrangement with a country that is going through a lot of trouble caused by balance-of-payment crisis, either for internal or external reasons, we say when it’s macro-critically relevant, let’s examine what you could do specifically to help women access to the workforce. So we’ve done that in the case of Jordan, for instance, which is determined to help women access and have a better chance.

We did that in the case of Niger. We did that in the case of Egypt. We are doing that in the case of Argentina. And it takes very different forms. As you can imagine with those countries, it often takes the form of having some child-care budget and improving the child-care facilities. But it takes unusual forms as well. In Jordan, for instance, it was a determination to actually spend more money on transportation, because unsafe transportations actually prevented many women from going from home to work because of fear what would happen in between. So those are the kinds of things that we try to do.

MANYIKA: And do you—I mean, there was a point, as was pointed out at the beginning, that, in fact, we’ve been having societally this conversation now for about a year and a half or so. But as you think about the economic landscape, do you think this is a turning point? Do you—

LAGARDE: No. No. No. I think it—I think it’s—we are on a road. We’ve come a long way. You know, I remember my mother co-signing checks with my father, bless both of them. But it’s an ongoing journey and one where we have to just continue to stand together shoulder to shoulder with people like you and many other men who believe that it’s actually worth it, and it’s not going to jeopardize our respective relationships. It’s a continuous road, because there is always a tendency to backtrack. There are always forces that will tend to suppress and repress rather than open barriers.

MANYIKA: Open them.



LAGARDE: That’s my life, so—(laughter)—

MANYIKA: We’re going to go to the—

LAGARDE: Maybe other—

MANYIKA: We’re going to go to the audience for some questions. And if you have a question, please put up your hand. And we’re on the record. Just say your name and your affiliation. And please ask a question.

There’s one right there.

Q: Good morning. I’m Lauren Leader. I run All In Together, which is a women’s civic-education organization here in the U.S.

On the subject of civics and politics, I haven’t had a chance to read the Council’s certainly stellar report. I’m astonished often at how rarely the topic of women’s political leadership and participation comes up in the context of economic participation. The WEF looks at those things in consort. So the U.S., for instance, is 96th in the world on political participation, though number one in the world for educational attainment.

As you mentioned, Tunisia, that’s what triggered it, because Tunisia has had some very progressive laws around women’s political representation in their parliament.

Could you talk about the impact of women’s political representation in parliaments and the governments on their seriousness with which they look at closing the labor force participation, addressing some of these larger economic issues? I think they’re inseparable, but I continue to see them treated very separately in the sort of global dialogue about that.

LAGARDE: Very good point. First of all, global and average numbers are abysmal, whether it’s in parliament, in government, heads of states. The number of women—I think the heads of states, we have eleven at the moment heads of government, twelve, and the average participation in parliament is around 20-ish percent. So that’s really not good.

In countries where—second point. I think that quotas can actually make a difference. I’ve seen it and I’ve witnessed that in my country, where quotas were imposed at local level gradually, then at the senatorial levels, and when we had—and as a result of that, we simply had a very large and growing numbers—number of women in parliament; not there yet, but moving.

Third point: In those countries where, either because of quotas or because of the political determination of people or because of the scarcity of resources, the numbers look much better. And obviously you will think at this point of the Nordic countries. Surprise, surprise—they have much higher participation of women in their respective organizations at executive and legislative levels, and they also have the smallest gender gap when it comes to female labor force participation, although no country has actually effectively closed that gap. I think the lowest gap ever in the world is seven. And no country has gone below that.

But I also think of countries like Rwanda or like Ethiopia, where in Rwanda you have 61 percent female participation in parliament. In Ethiopia, I think the goal is 50 percent for the next election. And the government itself in Ethiopia is now 50 percent female. In Rwanda it’s a little less than that. But when I look at Rwanda, there are notable things that can be said about Rwanda, but you cannot deny that it’s efficient, that it’s well run, and that the development indexes—and maybe Kristalina will talk to that more than me—are quite stellar.

One more, actually, which I’m taking politics into—hiring and retaining people and promoting them along the way has a political dimension. And in the field that I know well, when you look at the banking sector and you look at those banks and those financial institutions where you have a higher proportion of women than, again, the abysmal number of 20 percent board members or members of executive committees, and 2 percent of CEOs, when you look at those institutions where the percentage is much higher, you also realize that the nonperforming loans—surprise, surprise—it’s correlation, not causality. But correlations can speak volumes.

Volume of nonperforming loans, much lower; risk index, much better; and buffers in terms of capital, much higher. Quote, for me, that means safer.

MANYIKA: There’s a question in the back that went up first.

Q: Hi. Good morning, and thank you so much. My name is Amina Tirana. I’m with Visa, Inc. And I’d like to thank you especially for bringing attention and calling out both the low-income countries but also the question of informality.

And I’d love to hear some of your thoughts, maybe on a couple of policy priorities or recommendations, for addressing the informality of labor and women in many of these countries. And it’s something that at Visa we’re thinking quite a bit about, especially for micro- and small-business owners, who are people who have what we call livelihoods or even subsistence business in retail, where the goals—women are often tied to home. They can’t move for jobs. And the goals, as we do more and more research, not always about growing and becoming a big enterprise, but about security of income, stability for the family, and providing for the next generation. They don’t want their children to have to do what they’re doing as well.

Often those businesses are informal or quasi-formal. Do you have recommendations about how we can help them thrive and meet their goals?

LAGARDE: First of all, I think that we should be able much better to measure that and to really take that into account in any of those growth measurements and economies’ measurements, because what you can’t measure, you can’t actually influence very much. So we operate on the basis of assumed informality numbers. But we don’t know enough. We don’t have enough in that respect.

As a follow-up to that, in a way, I think that technologies can actually help a big way. If you look at countries like India or Kenya, I mean, they’re the most typically quoted references, but there are other countries as well which are using, you know, digital payment, mobile applications, that can actually identify economic operators, and in many instances simplify their life, but also measure what transactions are conducted, what business is generated.

Third point, I think you can design taxations and you can design your fiscal principles in order to not repress that activity but bring it into the fold by not assessing massive either social-security charges or tax charges in a brutal and heavy way, but do it very gradually and very incrementally in order to bring about that informality.

Fourth thing, which I believe also matters a lot for women, is to put in place those cash-transfer systems that have been used in some instances with technologies in the process in order to eliminate the risk of theft violence against women that apply whenever there is real cash being transferred and carried around; and second, encourage other factors such as girls in education or less informality and better access to services. It’s all linked, and you really have to treat that in a very comprehensive way. But I think the means—I think we’re getting more tools to reach those objectives.

MANYIKA: The person right here in front.

Q: Thank you so much for being here this morning. My name is Nili Gilbert. I’m a co-founder and portfolio manager at Matarin Capital.

My question for you is specifically about women in control of capital. As you know, when it comes to moving major institutional capital around the world, much of the money is being moved by men. And I think a lot, as a portfolio manager, about how the backgrounds of the people on our team making decisions about money affect the way they move the money, the decisions that they make.

I wonder, you know, particularly for a woman like you in your role or Ms. Georgieva at the World Bank, whether you think that if there were more women making decisions about how the major pools of capital are moving around the world, would it have the potential to actually change the structure of the capital markets or the types of projects that capital is flowing to. Thank you.

LAGARDE: That’s a really—I’m learning from you as much as I’m trying to think about the response.

I’m known to have said that in 2008, if Lehman Brothers had been Lehman Sisters, we would not be—(laughter)—in the mess we were in and continue to be. (Applause.)

So I don’t know what it would look like if there were more women involved in those portfolio managements and in those financial flows that we see around the world. I don’t know because I—we don’t have the counterfactual, because there are so few women in those businesses. So it’s hard to imagine.

But if we extrapolate a little bit—and based on the work that we’ve done on banks and financial establishments, I would assume that the business conducted in those fields would be less risky, would be safer, would probably be better hedged, and possibly, when it comes to the financing of infrastructure projects, for instance, would take into account the impact on women’s life.

So if—you know, I’m dreaming here, but if policymakers and the financiers of those decisions were more women, had more women, maybe the choice between a huge big arena—(laughter)—France World Cup, yes, but—but—(laughter)—and a major project that would help, you know, with water, you know, a good, sensible dam with irrigation projects associated with it. If you—if more women were involved in that choice, maybe—maybe—the choice would go in the direction of water than soccer. (Laughter.)

MANYIKA: We’ll take a couple more.

One over there?

Q: Thank you very much. My name is Janet Fleischman with the CSIS Global Health Policy Center.

Melinda Gates had said last year that no country has emerged from poverty without expanding access to contraceptives. And I wonder if you could speak about the enabling environment for economic empowerment for women and the importance of access to women’s health services, to family planning, and the impact that this has in countries around the world, including in the U.S., but certainly in many of the developing countries as well.

LAGARDE: You know, where we have the most empirical evidence is in relation to low-income countries where you see—where you have seen over the course of time an empirical evidence of the fact that when education is longer, when family size are smaller, it’s an—well, sorry, I shouldn’t—I’ll work it around the other way. When you have reduced—it’s not reduced fertility, it’s reduced natality, it’s invariably caused by longer and higher levels of education for women. So the linkages between these two factors, education for women and number of children, is obvious.

The same goes for age of marriage. And we’ve done a study on India in that respect where you can actually very visibly see that with an additional number of compulsory education, the age of marriage moves into time; and therefore, the number of children subsequently is slightly reduced. But that’s, I mean, that’s the best that we can produce in that respect and it’s obviously as a result that in order to develop, grow an economy, you need to provide the level of education that will actually maintain fertility at an acceptable rate. And I agree with Melinda.

MANYIKA: Yeah. Actually, there was a terrific study that I think U.N. Women did that actually included that.


MANYIKA: It also even included factors like physical safety, for example, how the linkages—

LAGARDE: Transportation—

MANYIKA: Transportation, right.

LAGARDE: —comes to mind. You know, access to proper sanitation is another one. Yeah.


There’s a question right in front here.

Q: Thank you.

LAGARDE: I remember, by the way—this is—this is a funny memory that you bring back because you mentioned Melinda. But we had a fantastic conversation in India with the prime minister in attendance about the size of sanitation and the height of walls behind which people could do what they have to do and how it impacts on the freedom of movement of women and their ability to actually go to work or leave the house. We don’t think about it because we are in the U.S. and that’s not something that we’re exposed to, but boy. Sorry for that discretion.

Q: No, it’s a terrific one. And thank you so much and such an inspiration to hear you and also Kristalina when we get to her conversations around these issues.

I loved your piece, your response in terms of this is a—this is a journey, this isn’t something that’s going to turn around in a short period of time, and just kind of linking this to the various dimensions of this question of economic opportunity, including the political.

But also, I’d love to hear your thoughts around the social context as well because we’ve been—we’ve seen evidence over time and we’ve been learning as we’ve done more research and studies. But at the heart of it, we’re talking about social constructs and values, I think, in communities in terms of how women are perceived in society. And I would love to hear your comments around where, if there are any gaps, or how could we look differently at those, how could we respond differently, I think, to those questions as we are putting forth the evidence that you’ve just described in terms of the gap numbers, the impact on women, the questions around whether women’s participation in some of these decision-making would actually make a difference, et cetera.

But getting back to your thoughts just around that whole, at the end of the day, the social construct that we’re dealing with around how women are perceived and values that we have.

LAGARDE: I’d be out of my depth to address your question. So you might be yourself better placed in a position to address those issues. (Laughter.) You know, I can only speak to what we try to measure, what we try to influence, and based on honest facts—honest facts—and numbers, yes—(laughter)—and my—and my own history.

But, you know, I’m deeply convinced that it is a revolutionary process because it changes, it disrupts. It shouldn’t displace and it shouldn’t be conducted in a way that is aggressive and adversarial because I think everybody stands to benefit from that. I have other beliefs, but that’s irrelevant. (Laughter.)

MANYIKA: We’ll take probably two more.

One over there on this side.

Q: Nan Cohen, Princeton. Thank you for being here.

I wanted to go back to part of an answer you gave earlier about the ways in which including more women brings greater diversity and, therefore, greater productivity. Could you say something? Used the word “characteristics”—what sorts of characteristics, given that we’re all individuals and very varied, what sorts of characteristics do women in general bring that strengthens an organization?

LAGARDE: The easy answer to that without taking sides—and I’ve indicated on which side I am, right—but I think the first easy answer is diversity in and of itself, because we look different, we have different backgrounds, we have different approaches to life in many instances, all of us. And it’s not just diversity based on gender, it’s a diversity that is based on gender, on colors, on religion, on background, on education.

You know, from Princeton, you come with a particular background. If I come from another vocational school somewhere, I have a different background and we both equally can contribute, yet we will bring diverse contributions. The simple fact that there is diversity I think enriches the debate and forces you, forces me to listen to somebody who comes from a different background, different religion, different framework of mind. We were talking about that earlier on.

You know, how do you put yourself in the shoes of somebody who’s been trained and educated in China or in the Middle East or in a civilization and with a cultural background that is so different from yours and from mine? That in and of itself because it leads you to doubting and questioning and arguing for your own sake. That is, I think, a plus and enriches and makes the contribution—the output as they call it—more productive.

I also think for myself—and that’s only based on my life in, you know, twenty-five years of private sector, now soon ten years in public sector—I believe that men and women react in a different way to situations. It’s overstated as a generality. I would say that a large majority of the responses, I can, you know, blindly contribute to the playing of music, for instance, which—


LAGARDE: —even behind a curtain, yeah, I think that there are differences in terms of being more prone to taking risks or not, thinking ahead, which is why I was thinking that maybe that world of portfolio management would be less risky and better hedged.

I’m sorry to say, but thinking of others rather than thinking about oneself also comes to mind. And I don’t know whether it’s, you know, determined by nature, whether it’s determined by history, whether it’s determined by education, I don’t want to opine on that. But I have seen for myself those clear distinctions and we are seeing it in portfolio management as well and in—and in banks. Again, big, strong correlations do not justify causality necessarily, but it’s pretty strong.

MANYIKA: Over to this side. Thank you.

Q: Hi. Thank you so much. My name is Nancy Lieberman. I’ve been a partner at a major international law firm, Skadden, Arps—


Q: —for decades. I’ve been there nearly forty years. And I do M&A law. And my experience in addressing corporate boards has led me to conclude that if there were more women directors, just as you were answering the last question, it would make a sea change difference in so many areas that impact equality of women in the workplace.

I know that the EC now has a quota system for demanding that women be on corporate boards. I personally am not a great believer in quotas because I think it diminishes what a woman brings to the party if the label is “I’m a quota person.” So I don’t like that.

So my question to you is—and I have served on a corporate major board, so I’m familiar with the process—what do you think will change the way boards choose directors to get more women on? Because from my own personal experience, I think there’s a huge amount of resistance still.


Q: So what’s your solution to the problem?

LAGARDE: I’ll give you a very practical example. And by the way, I’m almost on the same page as you and I was totally on the same page as you until I became chairman at Baker & McKenzie. And I looked at the number of female partners and I looked at the population we had and I looked at the gap and I thought solve it, we need quotas, and I’ve completely changed my mind, not forever, but the step is just too high and we need—we need—we really need it. And I think what we’re seeing in some of the—some of the European countries—and France was, you know, on the—on the forefront of requiring that there be, first of all, 30 percent and then soon 40 percent of women on boards.

I’ll give you my personal experience of that because I think that it goes down to the practical details and the weeds of what we do. I was finance minister for a period of four years right at the time of the financial crisis, so a tough job to do. But I had a portfolio myself of state-owned or partly state-owned companies and not, you know, small things. You talked about, you know, the big telecom companies, the big utility companies, you talk about airports, you talk about airline companies, all those. So it didn’t exist at the time, but I said I would like to meet each and every one of the chairmen or CEOs. It’s good enough to be represented at the board by some of my civil servants—fine—but I want to see them, and I’m going to invite them into my office to hear about their strategy because I just want to hear.

So they all came and, invariably, I finished those strategy-dedicated meetings to, of course, you have women on your board? And invariably, the answer was, uh, no, or sometimes, oh, yes, of course, I have one. (Laughter.)

Q: It’s still like that, by the way.


Q: It’s still like that.

LAGARDE: I know. Yeah. And so we all have to continue doing that.

So I said, well, why is that? And they said, well, you know, we’re making an effort by blah, blah, blah, blah, blah, blah, it’s very difficult to find. So I said, well, you know what? When we see each other next year, I hope you’ve made progress and you’ve identified board members that will have joined your board because you’ve got a couple of very aging gentlemen here—(laughter)—that would be better off doing something else.

So comes the next year. I knew what I was going to get, I just knew it, so I was prepared for that. So they all came, and I got invariably, except for one, the same answer: Minister, I tried so hard, but I couldn’t find a competent woman to do the job. So I said, oh, very good. You know what? And I pulled out of my pocket a list of about thirty women, who were not only competent, but willing and just ready to serve. So I said next year, you just come and see me, and if you haven’t changed your board composition, you’re in real trouble. And that changed.

And it’s at that time that the parliament actually passed the—I did not cause that law, you know, in fairness, I supported it, but that’s when they passed the law on minimum threshold in all boards of publicly quoted companies. And now it’s moving to the medium-size companies as well where there’s a huge, big, big gap.

MANYIKA: We’ll take our last question over there.

Q: I know how you feel when you go to a meeting where you are singled out somewhere. (Laughter.) But I am a philanthropist and I work with the United Nations, with the IMF, and the World Bank, with UNESCO.

And I want to share a personal story about my idea about the women’s empowerment. I had a chance to serve with Hillary Clinton on a project in Amman, Jordan for a museum fund for international artists. And the UNESCO was looking for a philanthropist, you know, and they were not able to find someone who was committed to women’s empowerment, who liked the Muslim culture, and who had the incentive to go into such a project, but I was the one. So you (just find ?) about my sorrow when Hillary lost her election in November 2015 (sic; 2016). I tried to recover from that.

But my point is the fact that, if I am a women-empowerment-committed man, the reason is because when I was six years old in the kitchen, my mother explained to me the fact of life, that women cannot drive, not in the city, cannot borrow money, cannot own money, cannot have property, and everything. I said, wow, this is incredible, I want to fight against that.

So my suggestion—and by the way, there is something good that is happening right now. Three weeks ago I was at Goldman Sachs for a (third year ?). Normally, there is one woman there and then, yes, there’s one there, but this year there was a lot of women. And I said, my goodness, something happened here. And in the panel, the same thing. There was a new CEO at Goldman Sachs and then he told us this is something I want to achieve.

But my suggestion, why not train, implement, influence young kids at six years old in the elementary school, even preschool, about what is a woman, why she’s good, why you should look at her and change your mentality early on. This will change a lot of things. And then probably two, three, five years ago, I will have (half ?) women interested by this subject because it is very, very crucial. Thank you.

LAGARDE: Thank you so much. You know, I don’t—I don’t think anybody can disagree with you. I would go one step further. I believe—I strongly believe that everywhere we go, everywhere we are, we can actually have that at heart and make sure that we identify in our family life, in our professional life, in our day-to-day life how we can better respect, better access, and better encourage.

Because, you know, when I started at the IMF, macroeconomists in the main said, oh. So even there, now there is a very strong current of people who say, yes, of course it matters, yes, it is macro-critical.

So when you’re a six year old, yes, absolutely, because you determine, and even before that possibly, and on and on and on and wherever and forming teams and foraging alliances with both men and women. Yes.

MANYIKA: Well, that’s a wonderful note to end on. I just want to thank you for taking the time, Christine, to have this conversation, to come here on this macro-critical issue. (Laughter.) Thank you.

LAGARDE: You got it. (Applause.)


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