Women’s education is now recognized as a cornerstone of economic development. It’s recognized by economists and scholars alike as being the key nutrients to seeing an economy fully develop and blossom. Educating a woman and leveraging her talents, is the consistent determinant of progress for practically every development outcome: from mortality declines to economic growth, the benefits to societies and economies have become obvious and concrete. Investing in and understanding the importance of the education of women is simply smart economics. This is not to say that the only basis for inclusive societies is based on economics. The reasons extend far beyond the reach of this article. Yet for those who might not listen otherwise, the data on economic development alone should prove enough of an incentive.
In the increasingly open global economy, countries with low rates of literacy and gender gaps in education tend to be less competitive, because foreign investors seek labor that is skilled as well as inexpensive. Women with all types of educational backgrounds and degrees contribute vastly to the quality, size, and productivity of a workforce, and subsequently a nation. Economies that fail to make use of the skills of half their potential workforce are at a huge disadvantage relative to those where everyone is contributing. World Bank economists David Dollar and Roberta Gatti have studied the effect of women's education and have concluded that, “Economies that have a preference for not investing in women pay a price for it in terms of slower growth and reduced income.” Additional research by Bloomberg shows that investments in female education can yield a “growth premium” in GDP. The study concluded that a one percentage point increase in female education raises the average gross domestic product (GDP) by 3 basis points, and raises annual GDP growth rates by 2 basis points. To make this a reality for you, think of China. In 1968, Mao Zedong, China’s famous “President,” saw women as a resource and launched a campaign to get them to work outside the home. Since then, China’s GDP, the total monetary value of all of its good and services, has increased from $149.54 billion to over $11 trillion today, and growing consistently at a 6-7% annual rate, not to mention that currently over half of all Chinese college students are now women. I’ll let you judge whether Zedong’s campaign made a difference.
Women with degrees in business or that have had exposure to business have also made a significant impact in the world through entrepreneurship and allowing firms to gain access to a deeper pool of well-trained labor, creating wealth and economic prosperity. In fact, the data says that women make better corporate leaders. According to Catalyst, a research and advisory company, companies with the highest representation of women board members attain significantly higher financial performance than those with the lowest representation – on average 42% higher return on sales and 66% higher return on invested capital. Further research also estimates that companies with three or more women in senior management functions score higher in all dimensions of organizational effectiveness.
The evidence shows that women can be powerful drivers of economic growth. Research shows that over the next decade, the impact of women on the global economy will be at least as significant as that of China’s or India’s one-billion-plus populations, if not greater. Successfully leveraging women’s economic potential would be the equivalent of having an additional one billion individuals in business and in the workforce contributing to the global economy. Other estimates show that if female education rates were to rise, the overall GDP would grow significantly in the U.S. by 5% and in developing countries like Egypt by a massive 30%. From an investor standpoint, I’m following the trends.
It may be unconventional, but following the countries that see the importance of educating women can pay off in the long run – as an investment strategy. I mean, smart economics makes for smart investing, right? For example, look at Brazil. In 2003, Brazil launched the “Bolsa Família Program,” with the goal being to trust lower socioeconomic families with small cash transfers in return for keeping their children in school and attending preventive health care visits. In layman terms, Brazil invested in its young girls and subsequently, its future. The initiative is already starting to pay dividends. Brazil is currently experiencing a moment which could be historical for the global economy. There has never been so much entrepreneurship in the history of the country. According to the Global Entrepreneurship Monitor (GEM), Brazil is ranked 4th in the number of entrepreneurs in a survey done with 68 countries which represent 75% of the world population and 89% of the global GDP. Guess what? Women play a significant role in this. Today, Brazil counts on seven million businesswomen, marking an increase of 21% over the last ten years. Women now represent 52% of the leadership in new businesses. Oh, and how’s the Brazilian stock market doing? Over the last year, the Ibovespa Brasil Sao Paulo Stock Exchange Index (Brazils version of the S&P 500 index) is up over 28% and is up over 8% year-to-date. Obviously, like any emerging country, there will be high highs and low lows, but clearly, there's significant growth and profit potential.
The evidence is clear: Educate a woman, empower a nation.
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Bourne, J. (2014). Global Partnership for Education. Retrieved from http://www.globalpartnership.org/blog/why-educating-girls-makes-economic-sense
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