Globalization Helps Women Thrive

Countries with greater openness to trade often experience higher levels of gender equality. This connection is partly due to the association between international trade and the increased educational attainment and skill development among women and girls. For women in developing countries, globalization means more opportunities to increase their own skills and wages, participate in the labor force, and provide for themselves and the well-being of their families.

Across developing countries, firms that engage in international trade employ more women. According to a joint report by the World Bank and World Trade Organization, women are 33.2 percent of the workforce of firms that trade internationally compared with 24.3 percent of nonexporting firms. A similar pattern emerges for firms that participate in global value chains (GVCs): Women are 36.7 percent of the workforce of GVC firms and 37.8 percent of the workforce of foreign-owned firms, compared to 10.9 percent and 12.2 percent for non-GVC and domestically owned firms, respectively (Figure 1).

The United Nations reports that women make up a disproportionate share of workers in the informal economy: over 80 percent in South Asia, 74 percent in sub-Saharan Africa, and 54 percent in Latin America and the Caribbean. Street vendors, domestic workers, and subsistence farmers are common examples, and these jobs usually have poor working conditions with no social protections or social benefits.

The absence of social protections and social benefits such as pensions have long-term consequences, particularly for women. Globally, fewer women receive pensions, leading to a higher incidence of poverty among elderly women. Organisation for Economic Co-operation and Development data show that old-age poverty rates are higher for women (13.6 percent) than for men (8.7 percent).

Globalization helps draw women out of the informal economy and into the formal economy, providing them access to benefits, training, and job security. The likelihood of informal employment for women decreases from 20 percent in low-export sectors to 13 percent in high-export sectors. Additionally, women experience a greater reduction in informality compared to men, with a 7‑percentage-point decrease for women versus a 4‑percentage-point decrease for men.

The digital economy is a defining feature of globalization, and women in developing countries have benefited, especially women entrepreneurs. In Rwanda, digital platforms such as the Kiva lending platform and Shopify have enabled women entrepreneurs to access microloans and set up online stores. These platforms provide women with the resources to expand their businesses and reach global markets while offering training and support for digital skills.

In Nigeria, e‑commerce platforms have expanded market access for women entrepreneurs. According to Juliet Anammah of Jumia, a popular digital platform in the region, 51 percent of their sellers in Kenya are women. In comparison, women account for 31.4 percent of small and medium enterprises in Kenya and 32.9 percent in Nigeria. By listing their products on these platforms, women have been able to reach a broader audience, increase their sales, and gain visibility.

A factory operating in a developing country can look like a sweatshop to someone in the West but can mean a better life to someone in a poor country. In 2016, The Sun wrote an expose about “slaves earning just 44p an hour” (about $6.75 a day at the time) in Sri Lanka making clothes for Beyonce’s product line. But for Sri Lankans, that wage was approximately double the legal minimum wage at the time ($67.56 per month or $3.38 a day). As Jeffrey Sachs noted, “sweatshops are the first rung on the ladder out of extreme poverty.” There is a clear distinction, however, between a forced labor camp and a factory that pays wages far less than those in the West while offering a better life for someone in a developing country. When it comes to “sweatshop” work, the latter scenario is most prevalent.

Nevertheless, forced labor unfortunately remains in many parts of the world. A recent International Labour Organization report states that 28 million people are trapped in forced labor and that 22 million are trapped in forced marriage. In her bookMade in China, Amelia Pang describes how, in 2016, an Oregon mother opened a package of Halloween decorations and found a handwritten SOS letter written by a Chinese engineer turned political prisoner who was being held against his will and forced to stitch clothing and carve foam gravestones for 15 hours a day or more.

Ironically, international trade exposed the tragedy Pang identified, and international trade tools have a small but positive role to play in reducing forced labor generally. For instance, in 2021, Congress passed the Uyghur Forced Labor Prevention Act, which aims to ensure American entities are not funding forced labor among ethnic minorities in China. Between June 2022 and July 2024, Customs and Border Protection reviewed over 9,000 shipments valued at over $3.4 billion, covering a broad range of products from apparel, automotive parts, chemicals, electronics, flooring, and solar panels. In addition, the Department of Homeland Security tracks entities that use forced labor, and that list continues to grow.

Furthermore, globalization has enriched poor people and nations by creating better jobs, higher wages, and improved working conditions, challenging the early fears of a “race to the bottom.” Despite concerns raised by critics like Nobel laureate Joseph Stiglitz, data show that countries most integrated into global supply chains have seen the fastest reductions in poverty, child labor, and unsafe working conditions.

Johan Norberg’s Defending Globalization essay shows several aspects of this. For instance, the share of the population living in poverty in Bangladesh has dropped from over 40 percent in 1981 to 13.5 percent in 2016 as the country’s trade flows increased as a share of gross domestic product. Norberg also shows the decline in the share of hazardous child labor (aged 5 to 17 years) over the past two decades, from 11 percent in 2000 to 4.7 percent in 2020, as international trade and investment has grown. Much work remains, and we would all like to see these numbers go to 0 percent. But as cross-border trade and investment have grown, these figures are trending in the right direction.

In advanced economies, women-owned businesses are taking advantage of two defining features of globalization: digital platforms and innovative financial technologies (or fintech). Women are leveraging digital platforms to reach larger integrated global markets and fintech tools to increase access to capital. Also, in the United States, women have experienced the China Shock differently and have dealt with the fallout from a declining men’s labor force participation rate.

The costs of exporting, barriers to trade, and the lack of knowledge of foreign markets keep most firms focused only on the domestic marketplace. However, with over 95 percent of the world’s consumers outside our borders, accessing the global marketplace offers opportunities for better firm performance. Digital platforms have been a game changer for buyers and sellers, and women have taken advantage of these technological developments.

Firms that export and or import tend to have higher wages, higher revenue growth, longer survivability rates, and better benefits. Yet, overall, only 2.7 percent of employer firms export, and only 1.7 percent of women-owned employer firms export. (Employer firms are firms that have employees as opposed to one-person firms.)

Being a retailer in today’s economy no longer requires capital-intensive shopfronts or face-to-face interactions. Buyers and sellers can find each other online, and digital platforms can decrease the cost of doing business across borders. Etsy, an online retailer, reports that 97 percent of its sellers run their Etsy shops from their homes and that 80 percent are women.

Between the first quarter of 2015 and 2020 (before the global COVID-19 pandemic), Etsy added approximately 50,000 to 100,000 new active sellers each quarter. Between 2020 and 2021, the number of new active sellers rose to 500,000 to 700,000 per quarter. This occurred while more women than men were dropping out of the labor force to care for children and family members as schools closed during the pandemic.

American women aren’t the only ones taking advantage of digital platforms. Forty-five percent of Etsy’s gross merchandise sales volume is international. The World Bank reports that digital technologies and online platforms are creating economic opportunities for women in developing countries.

Women are also taking advantage of innovative fintech. PayPal Public Policy Lab reported that 79 percent of all small businesses that use PayPal (a fintech payment method for the digital marketplace) engage in exporting and that nearly 3 out of every 4 women-owned businesses that use PayPal export their goods and services. They also report that the growth rate for women-owned exporting businesses was nearly equivalent to men-owned exporting businesses. In other words, digital platforms and fintechs are helping to close the gender gap in exporting and firm performance.

Even on Facebook Marketplace, a platform known for its strong local presence, the propensity to export is higher than national figures for both men- and women-owned businesses. Survey data by Facebook, the Organisation for Economic Co-operation and Development, and the World Bank, covering the United States and 41 other countries, showed that firms on the platform exhibited a higher propensity to export than firms in general for every firm size category (except the largest firms) and every industry category. The propensity to export on Facebook Marketplace was higher than that of the general population regardless of the gender of the business owner.

Empirical evidence on the economic effects of digital platforms is still frustratingly scarce. However, existing data points are consistent with the notion that digital platforms have helped to close the exporting gap between men- and women-owned businesses. This is partly linked to how digital platforms and fintech facilitate the transparency of buyer and seller information, trusted payment methods, and other networking and administrative support.

Innovative fintechs are another defining feature of globalization. One study examined online business lending for small and medium enterprises, particularly firms operating online, including digital platforms. The authors found that women entrepreneurs were disproportionately represented among fintech borrowers for the crowdsourcing platform Kiva: only 36 percent of small and medium enterprises were owned by women, whereas 53 percent of fintech borrowers were women. Innovations in fintechs are leveraging targeted data analysis generated from past transactions, social interaction data, and back-end financial data (taxes, receivables, etc.).

For all consumers, globalization has generally meant more variety and lower prices, especially on goods. Since the mid-1980s, when international trade began to increase sharply, tradable items, on average, have exhibited lower inflation than nontradable items. Detailed analysis of goods and services from 2010 to 2015 shows that the more tradable a good or service was, the lower inflation it experienced, benefiting all consumers. But there is one area where women have not quite gotten as many benefits: clothing. US tariffs are higher on women’s clothing than men’s, and the difference in some areas is discernible. A tariff is an import tax, and the tariffs on women’s overcoats, suits, shirts, and undergarments are higher than they are on those men’s products. According to Arthur Gailes and others, women pay approximately $2.77 billion each year more than men on clothing due to tariffs.

China’s entry into the World Trade Organization in 2001 was followed by a surge in US imports and exports, albeit in different subsectors. The economic impact on the US labor market and trade patterns resulting from this surge is known as the “ China Shock.” Women have had a different experience than men with the China Shock, which can be partly seen with three factors: Women have been concentrated in industries less directly exposed to import competition, have become just as mobile as men, and have increased their labor force participation while men have decreased their participation.

The US economy experiences constant job creation and destruction. On average, each month over the past two decades, the US economy “created” 5.2 million jobs and “destroyed” 5.1 million jobs. Job creation includes hires, and job destruction includes separations, quits, layoffs, and discharges. But whether people can find reemployment at the same wages as before depends on several factors, such as business cycles, technological factors, and labor mobility.

Economists have examined the increase in US imports from China, the global supply chain dynamics, and US exports. Robert Feenstra and Akira Sasahara examined the employment effect of the China Shock and found a 1.7 million increase in net labor demand in the United States.

This net increase masks a large amount of job churn. Manufacturing, which has only 23.1 percent women, experienced 1.4 million jobs lost and 2.0 million jobs created. Services, which has 54.1 percent women, experienced 600,000 jobs lost and 1.4 million created. Resource industries also experienced a net gain of 500,000 (Table 1).

The share of women in good-producing sectors is 23.1 percent compared to 54.1 percent for services (Figure 2). Goods, including manufacturing, have long been more tradable than services. Services complement manufacturing and other goods production but are less tradable internationally and less exposed to direct import competition. In other words, women were more concentrated in sectors that were less directly exposed to import competition.

In addition, after the Great Recession, women became just as mobile as men. Women have traditionally been less mobile than men, but after the Great Recession, that gap closed. This relative increase in mobility was a positive factor in women’s adjustment to globalization, including employment and reemployment prospects in the face of trade and technology changes.

Also, women have increased their participation in the labor force while men have been dropping out (Figure 3). The labor force participation rate is the labor force as a percentage of the civilian noninstitutional population. From 1991 to 1999, labor force participation for men dropped by 1.4 percent and rose by 3.7 percent for women. In later years, 1999–2011, the participation rate declined for both men and women, although the men’s rate declined much more. By 2023, women’s participation was 4.5 percent higher than in 1991 (and 4.2 percent less for men). Two factors that explain the rise in women’s labor force participation are increased educational attainment and a rising labor force participation among college-educated mothers with young children.

Women worldwide have experienced economic improvements from globalization, but it is not a cure-all. Numerous domestic policies and practices that keep women from taking advantage of globalization’s opportunities stubbornly remain. A lack of basic legal protections for women in many developing countries restricts women’s economic freedom and opportunities and excludes women from the benefits of globalization. For example, in Bangladesh, the law does not prohibit discrimination in employment based on gender, and women do not have the same rights to remarry as men, which leaves women more vulnerable to injustice in the workplace and limits economic security in later years. Customary laws in Nigeria and Ethiopia deny women the right to inherit property or land, limiting their economic security, independence, and ability to accumulate assets and access credit. Many countries lack legal protections against discrimination in access to credit. Pakistan requires a man to be a guarantor to access credit and financial services, which can hinder women’s ability to start or expand businesses.

Most advanced economies maintain gender-neutral laws, although sometimes cultural norms persist that can adversely affect women and leave a share of the labor force underutilized. Naomi Kodama, Beata Javorcik, and Yukiko Abe show that foreign direct investment was a channel through which globalization positively affected gender norms and labor allocation in Japan. (Japan is an advanced economy but ranks 118 out of 146 countries on the World Economic Forum Gender Gap Index 2024.) They found that foreign affiliates in Japan are more gender-equal than Japanese firms. The proportion of women among workers, managers, directors, and board members was higher in foreign affiliates than in domestic firms of comparable size operating in the same industry in the same year.

Women need more globalization, not less. In developing countries, firms that engage in trade hire more women, and globalization has helped to draw women out of the informal economy into the formal economy, where they have access to better working conditions and social protections. However, governments in developing countries and emerging markets need to enact gender-neutral laws and policies and change cultural norms so that women can take full advantage of globalization.

In advanced economies like the United States, women-owned businesses have leveraged digital platforms and fintechs to help close the gender gap in exporting and firm performance. During the past three decades, women have increased their participation in the labor force even in the face of economic changes brought on by trade and technology. Foreign direct investment can transplant corporate culture in ways that improve labor outcomes for women and the overall economy. Over the past decade, however, the number of trade restrictions has increased tenfold, which threatens to undo these gains from globalization. A recommitment to openness, eliminating remaining barriers to cross-border flows, and restraining protectionist tendencies will help to ensure women continue to benefit from globalization.