Let Them Eat Entrepreneurship: Women's Empowerment and Gender Inequality

This blog is published as part of The Transformation Conversation: Blogs on the UNRISD Flagship Report 2016 and Agenda 2030. The series explores what it takes to design and implement innovative eco-social policies that will lead to transformative change and fulfil the potential of the 2030 Agenda for Sustainable Development. Together with the evidence, analysis and case studies in the UNRISD 2016 Flagship Report they are part of the global conversation on implementing of the SDGs.

At the G20 meetings in Hamburg, Germany, earlier this year US President Donald Trump praised and promoted the US First Daughter’s work in women’s empowerment. Ivanka Trump joined World Bank President Jim Yong Kim to formally roll out the Women Entrepreneurs Finance Initiative ("We-Fi"), a World Bank facility focused on promoting women's entrepreneurship in developing countries.

It is true that in many societies, including in developed countries, women are heavily discriminated against in the ownership of economic assets and access to finance. The USA, Germany and other rich countries are contributing enormous sums to We-Fi to support women entrepreneurs and provide financing for women’s ventures.

However, the struggle against gender inequality has to be fought on many—if not on all—fronts, crucial among these being labour and social protection (concerns shared by both women and men in many societies). Is financing women’s entrepreneurship a worthwhile arena for empowering women?

Where does discrimination start?

Is this an overly narrow strategy to empower women? Does it justify the amount of attention and resources that it will require of international aid agencies? Or are there prior, more basic equity issues—before entrepreneurship—which maintain the discrimination that entrepreneurship cannot upend? In many societies, these would include secure access to livelihoods and assets (which unlock the finance which We-Fi seeks to replace by direct provision), and the way in which laws and practices in marriage, divorce and inheritance affect how assets are distributed. The hope is that successful entrepreneurship might alter the balance of power within families. However, this does not easily lead to the transformation of social norms.

One way to understand how these laws and practices are reasserted through generations is to look at how they serve to solve the difficult collective action problems that groups of humans have to address. They are the means by which societies have historically allocated and reallocated rights and privileges, costs and benefits, assets and decision making among their members to resolve collective questions.

Successful solutions can still be unjust ones

History shows however that societies can succeed in solving their collective action problems by means of unjust structures.
For example, a major collective action issue facing all human societies is how to bring up the next generation—otherwise the society will die out. Throughout history, in almost all cultures and societies, the social responses to this collective action problem have been delegated to women in a way that excludes most of them, and especially those subject to other forms of marginalization, from economic, political and cultural structures. Society’s reproduction arrangements also point to an important aspect of many social issues—relations among individuals and groups are not mainly mediated through prices and markets.

Some Western civilizations responded to the collective challenge of economic competition and defense against domination by other states via the institutions of slavery and colonization. In many developing countries, women played a key role in successful export-led development. The mobilization of women into export processing zones with low pay and vulnerable working conditions solved the collective action problem of producing garments and electronic goods at internationally competitive unit costs and attracted foreign companies to relocate or outsource production, as in the current case of Ivanka Trump’s company. Feminist research from the 2000s indicates that the low cost of non-unionized, and therefore docile, women’s labour in effect played the same role as an undervalued exchange rate in preserving international competitiveness . When foreign enterprises moved on to other locations, women returned to their families; when enterprises upgraded their production and needed less low cost labour, men replaced women’s labour.

Finally, and perhaps ironically, the gender pay gap persists in the same developed countries providing the financing for women’s empowerment in developing countries through entrepreneurship.

What’s the impact?

As they seek to empower women in developing countries by providing finance for business start-ups, aid agencies must ask why previous and ongoing efforts have had limited impact. Bursts of women business start-ups triggered by foreign aid have not proven to work in the long-term because they tend to succeed only within steadily growing economies.

Competition against imports when exchange rates strengthened suddenly because of uncontrolled portfolio inflows or the disappearance of local consumers during balance of payments crises have also caused irreversible bankruptcies in the small businesses associated with women. Consequently, aid professionals working on women’s empowerment through entrepreneurship ought to be strong advocates of expanded policy tools for developing countries to curb the adverse impacts of external shocks. These episodes leave participants—women—with unrepayable debt obligations. As with the previous women-inspired development fashion for microfinance, even aid interventions with weak developmental impacts have real effects on their participants.

Just low-hanging fruit?

Women’s empowerment through entrepreneurship makes for good media. But how useful is it really? Entrepreneurship specifically for women is arguably low-hanging fruit for development agencies, since women’s business activities are quite extensive in developing countries anyway, in small farming, small trading, small service provision, subcontract sewing for export and so on—in sharp contrast to the situation in developed countries.

Many people might conceivably have a stronger preference for stable, long-term jobs, rather than being thrown into the uncertain arena of running a business, but some in society have more choices than others. Because We-Fi could release new and additional foreign exchange inflows, it is understandable for developing country finance ministers to more than vehemently support women’s empowerment by this means.

Doing more harm than good?

It is important to do no harm and avoid the unintended consequences of empowering women through entrepreneurship which can be costly for its participants. It is also useful to be conscious that this effort could distract from the real struggles that women (and men) in developing countries are engaged in to achieve gender equality. Societies must find ways to undo the root causes of the unjust structures like gender inequality, that have long been used as a means of resolving their collective action problems. Whether financing women’s entrepreneurship is a suitable tool to produce such transformative change, or if it will mainly reaffirm, or at best moderate, existing inequities is a question that needs posing before more well-intentioned interventions do more harm than good.

ABOUT THE AUTHOR
Manuel Montes is Senior Advisor on Finance and Development at The South Centre.