A Lost Development Opportunity: Regional Integration to Empower Sri Lankan Women

By Dr Lakmini Fernando and Sulochana Silva

 

  • On average, women are paid approximately 20% less than men in Sri Lanka.
  • South Asia will take 149 years to achieve full gender parity, while this is 67 and 95 years for Europe and North America, respectively.
  • Providing equal employment opportunities for men and women can enable South Asia to enhance incomes by 25%.
  • An IPS study highlights the limited success of regional integration in stimulating growth and reducing gender inequality in South Asia and offers a set of recommendations for more gender-sensitive policy reforms across sectors.

 

Inequality results in adverse economic, social and political consequences. Unlike the advanced economies, improvements in education, fertility and incomes have not been able to enhance women’s labour force participation in Sri Lanka. Gender equality is a shared vision for social justice. Addressing gender inequality is crucial to achieve stronger and more sustainable development. While regional integration is seen as a potential development strategy to promote inclusive and sustainable growth and efforts toward women’s economic empowerment, gender equality tends to be sidelined in such discussions.  Thus, identifying and implementing the right policy mix for meaningful regional integration is vital in creating gender inclusive sustainable growth.

 

The Impact of Greater Economic Opportunities for Women

Greater economic opportunities for women create a domino effect. In South Asia, equal employment opportunities for men and women are estimated to enhance incomes by 25%, including increased intraregional trade of USD 44 billion. Yet, despite the improvements in education and health outcomes, low women’s economic participation remains a critical development challenge for developing economies including South Asia. In 2021, female labour force participation was 22% and 32% for South Asia and Sri Lanka, respectively, while all other regions except the Middle East and North Africa (18%) recorded more than 50% participation. Also, a gender wage gap of 24% indicates that on average, women are paid approximately 20% less than men in Sri Lanka. To achieve gender parity, South Asia will take 149 years, while this is 67 and 95 years for Europe and North America, respectively.

 

Regional Integration: Current Challenges and Opportunities

Unlike South Asia, other regions like East Asia, Europe and North America are harnessing the potential benefits of regional integration by developing strong relationships with their neighbours. Intraregional trade accounts for 50% of total trade in East Asia and 22% in Sub-Saharan Africa, but only 5% in South Asia. Intraregional trade as a share of regional gross domestic product (GDP) is only 1% in South Asia while it is 2.6% and 11% in Sub-Saharan Africa and East Asia and the Pacific, respectively.

 

South Asian regional integration has been restricted mainly by high tariff and non-tariff measures, lack of trust and political will, weak policy implementation and poor infrastructure. Although the impacts are asymmetric, deeper regional integration benefits any country. Consumers gain access to cheaper goods and services; producers and exporters gain access to inputs, investment and production networks; and firms gain market access for goods and services.

 

Reforming Stagnating Dimensions of Regional Integration Toward Gender Inclusive Growth

To promote gender-inclusive growth, a recent IPS study shows that it is essential to improve the stagnating dimensions of regional integration. This process is complex and varies by country due to its multidimensional nature. There are six key dimensions: trade and investment, movement of capital, regional value chains, infrastructure and connectivity, people’s mobility and legal and institutional basis for international policy cooperation.

 

Evenly distributed dimensions lead to better regional integration and higher women’s economic participation. With the most evenly distributed dimensions, the EU is recognised as the most advanced and consistent in regional integration (Figure 1) with more than 50% women’s economic participation.

 

In contrast, South Asia’s significantly uneven dimensional distribution makes it one of the least integrated and lowest women’s economic participating regions in the world. South Asia focuses more on infrastructure and connectivity and movement of people and less on money and finance. Similarly, Sri Lanka’s regional integration is impacted heavily by infrastructure and connectivity and this is no surprise as nearly 60% of public investment has been allocated to infrastructure development in the last few decades (Table 1).

 

Figure 1: Heterogeneity in the contribution of multiple dimensions of regional integration

Notes: Regions with the most evenly distributed dimensions have the highest female labour force participation. eg: European Union.

 

Source: Adopted from Park, C. Y., & Claveria, R. (2018). Does regional integration matter for inclusive growth? Evidence from the multidimensional regional integration index. Asian Development Bank Economics Working Paper Series (559).

 

 

 

Table 1: Identifying specific dimensions of regional integration toward gender-inclusive growth

 

 

Notes: The multidimensional regional integration index (MDRII) provides a cumulative score of six dimensions: trade and investment; money and finance; regional value chain; movement of people; infrastructure and connectivity and institutional and social integration. A higher score indicates better integration. The least contributory dimensions (with scores below 0.4) require significant reforms to ensure that regional integration promotes gender inclusive sustainable growth.

Source: Author’s calculations based on Park, & Claveria (2018)

 

The IPS study further reveals that improvements to institutional and social integration and money and finance reduce nearly 50% of gender inequality in South Asia. Furthermore, better institutional and social integration and movement of people positively impact women in industry and services sectors but not agriculture. In developing countries, women often engage in labour-intensive sectors, which are low-skilled and low-paid, referred to as the ‘feminisation of labour’. Regional integration creates new employment opportunities in the manufacturing and services sectors. This results in technology-led ‘defeminisation of labour’ leading to increased demand for female labour and higher wages.

 

In contrast, trade and integration negatively impact women in agriculture. The reason is their limited skills and mobility. Regional integration alters the structure of production where sectors with export opportunities may expand, while import substitution sectors may contract. Women in the contracting sectors may face job losses. Even in expanding sectors, women may not have benefitted due to horizontal and vertical gender segregation. Thus, selective opening of sectors and providing opportunities for upskilling and reskilling of women will help minimise the negative impacts.

 

Way Forward

Sri Lanka is yet to receive the full benefits of regional integration. Inherently, regional integration is multidimensional, and its impacts are country-specific. In boosting gender inclusive sustainable growth, a balanced contribution of different dimensions of regional integration is required. Improvements to most stagnating dimensions like institutional and social integration and money and finance would reduce gender inequality by nearly 50%. Thus, robust domestic policies that support the establishment of quality institutions and governance systems and financial conduct are most effective in making regional integration a strategy that stimulates inclusive growth and women’s economic empowerment in Sri Lanka.

 

“The World Bank South Asia Gender Innovation Lab’s (SAR GIL) Women’s Economic Empowerment in South Asia Community of Practice provided support for this research.”

 

Image Credits: Nazly Ahmed