- Girl power may be just the thing for Asian GDP
India has found an innovative and provocative way to address one of its biggest challenges. It intends to pay for girls.
The government plans to offer as much as $5,000 to poor families to give birth to girls and raise them. The aim is to reduce a cultural preference for boys that's throwing the nation's gender balance out of whack and threatening the long-term outlook for Asia's third-largest economy.
Sex-ratio imbalances also are a growing problem in China, where sons are often preferred over daughters. The concern goes beyond young men with no prospects of finding mates in the decades ahead. Economists say the gap may undermine Asian growth and productivity, and lead to bigger budget deficits.
A study published in the U.K.'s Lancet medical journal found that about 10 million female fetuses may have been aborted in India over the past 20 years. The U.N. Children's Fund says India loses almost 7,000 girls a day through abortions after illegal sex-determination tests.
According to the latest census figures, India has 927 females for every 1,000 males and the gap is growing. Paying families to raise daughters isn't the most delicate way to approach the problem, but kudos to India for trying.
India is helping to highlight one of the biggest forces holding back Asian growth. Its push for more girls coincided with International Women's Day on March 8.
Sandra Lawson, an analyst at Goldman Sachs Group Inc. in Hong Kong, marked the day with a report titled "Women Hold Up Half the Sky." It refers to a Chinese proverb about the pivotal role women play in economies. Lawson focuses on how things might be if governments did more to address the imbalance that persists between men and women in education, health, work, wages and political aspirations.
"At the macroeconomic level, female education is a key source of support for long-term economic growth," Lawson writes. "It has been linked to higher productivity, higher returns on investment, higher agricultural yields and a more favorable demographic structure."
It's the latter benefit India's latest initiative hopes to achieve by not only encouraging families to have girls, but to educate them better. That's why it is spacing out payments to families - to make sure girls end up in school.
"The economic growth that results from education feeds a virtuous cycle, supporting continued investments in education and extending the gains to human capital and productivity," Lawson says.
Gender discrimination isn't something on which investors tend to focus. It doesn't feed handily into stock valuations, bond yields or gross domestic product figures. Yet it's one of the region's least-appreciated weaknesses.
Lawson's report mostly emphasizes the BRIC economies - Brazil, Russia, India and China - and the "N-11," or the next 11 growth stars. They are: Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, the Philippines, South Korea, Turkey and Vietnam.
While it's a disparate group, Lawson estimates narrowing the gender gap could boost per-capita income by as much as 14 percent by 2020 and 20 percent by 2030.
Economists such as Lawrence Summers have long argued that returns on investment in female education exceed those on boys. The more educated women are, the more likely they are to invest in the health and education of their families. It leads to an economic ripple effect from one generation to the next.
So if you are wondering whether to invest in India versus China, Thailand or Malaysia, you could do worse than track the level of commitment to educating girls. The payoff comes in higher wages, lower mortality rates, healthier workers and greater entrepreneurship.
The under-education of girls is driven by a complex mix of causes, often lumped under the heading of culture.
"Its prevalence across so many countries strongly suggests parents think the returns on girls' education are limited and lower than those of boys," Lawson says. "This perception is in fact a misperception, and an unfortunate one."
The issue transcends education. Look no further than Japan, where women are still struggling to achieve anything approaching equality. It's not about schooling, but institutionalized sexism.
In 2007, Grant Thornton International surveyed 7,200 privately held businesses in 32 countries, representing 81 percent of global GDP, to gauge gender gaps for top-level executives. Japan came in last.
Things were thought to be changing a few years back. In 2005, Tomoyo Nonaka was named chairwoman of Sanyo Electric Co. and Fumiko Hayashi became chief executive officer of retailer Daiei Inc. They were the first women to run major Japanese companies. Nonaka lasted only 21 months; Hayashi was knocked back to vice chairman after two years in the top job.
Japan is still tapping only half of its population, which means it's drawing from a weaker labor pool. It's the economic equivalent of tying one hand behind your back, and it's among the reasons Japan underperforms.
It's true that Asian governments are talking more about empowering women. Yet action is needed to make proverbs about women holding up half the sky more fact than aspiration. A bit of girl power could go a long way.
By William Pesek
William Pesek is a Bloomberg News columnist. The opinions expressed are his own. -Ed.
2008.03.13
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