Macroeconomic Policies and Gender Budgeting

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Macroeconomic Policies and Gender Budgeting

• Prof M Govinda Rao
• Director
• NIPFP, India
• Email mgr_at_nipfp.org.in

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Equality and Efficiency Dimensions

• Macro policies are calibrated to accelerate
  growth, enhance human development, reduce poverty
  and stabilize the economy. These comprise of
  policies intended to achieve fuller employment of
  people and resources, and their efficient
  combination using the state of the art
  technologies. These involve, fiscal, monetary,
  labour market and trade policies.
• Integrating gender perspective into macroeconomic
  policies has dual dimensions an equality
  dimension and an efficiency dimension. In the
  context of growing recognition that problems of
  inequality could not be resolved by the trickle
  down effects of macroeconomic policies, the
  concerns of gender-inequality needs to be built
  in to the macroeconomic policy framework.
• Apart from the basic principle of promoting
  equality among citizens, gender equality can
  benefit the economy through efficiency gains.
  From the efficiency consideration, what is
  important is the social rate of return of
  investment in women, and in cases, this can be
  greater than the corresponding rate for men.
• Another way to look at the issue is through the
  Capability Approach. Capabilities earn
  freedoms. They can also enhance productivity and
  maximize outputs.

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People-mattered macroeconomic policy framework

• Worldwide there is a growing recognition
  regarding the need for a fundamental rethinking
  of macropolicy framework from a gender
  perspective.
• United Nations Conferences of 1990s have
  underlined the importance of adopting Sustainable
  Human Development paradigm, which takes gender
  equality along with poverty eradication,
  environmental regeneration, sustainable
  livelihoods and employment creation and
  democratic governance as its corner stones. Macro
  policies should be oriented towards that.
• A logical entry point to such people-mattered
  macroeconomic policy framework can be
  gender-aware, pro-poor and environment-sensitive
  budgets. GRB is one such initiative.

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Integrating Gender into macroeconomic policies
Efficiency Dimension.

• There is a growing awareness that gender
  inequality is inefficient to development.
  Empirical literature draws attention to these
  efficiency dimensions of integrating gender
  perspective into macroeconomic policies.
• National Output can be seen from both sources and
  uses side From the sources side, the marketed
  factors are values and existence of dual (paid
  and unpaid) economy distrts both efficiency and
  equity. With efforts informal and subsistence
  economies are included in the National Accounting
  but not domestic work and voluntary activities.
• The cost of creating labour is not taken
  account of. From the uses side, it misses the
  differences of men and women on consumption,
  saving and investment decisions.
• Studies have shown that women tend to spend more
  on building the capabilities of family whereas
  men tend to be skewed towards leisure commodities
  and services. Women have greater
  intergenerational altruism than men Women are
  more risk averse, but make investments on stable
  assets.
• Mounting evidence shows that gender inequality
  leads to major losses in economic efficiency and
  human development.

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Gender in Macroeconomics Research Findings So Far

• Systematic differences in the behavior of men and
  women may lead to different macroeconomic
  outcomes, particularly for such important
  macroeconomic aggregates as private consumption,
  saving, and investment, and for risk-taking
  behavior.
• There is a simultaneous relationship between
  womens economic and social status and economic
  growth. The evidence shows that womens lack of
  education, health care, and economic and social
  opportunitiesboth absolutely and relative to
  meninhibits economic growth while, at the same
  time, economic growth leads to a reduction in
  womens inequality. In countries with the lowest
  average income and where agriculture remains the
  main source of economic activity, womens lack of
  education, health care, and employment
  opportunities prevents them from being able to
  benefit fully from improved macroeconomic
  environments, hindering economic growth.

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Disaggregating Macro Policy through a gender lens

• Fiscal Policy
• Trade Policy
• Labour Market Policy
• Financial Policy

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GRB in Macropolicy Fiscal Policy

• Fiscal policy is not just confined to the issues
  of budget deficits Tax, expenditure and pricing
  and borrowing policies have to be analyzed as
  well.
• Much of the focus of GRB in fiscal policies was
  on structural adjustment. Compression of
  expenditures to correct budget imbalances
  invariably result in reduction in productive
  expenditures. Need to work out a policy
  combination to protect such expenditures. Need
  to introduce social protection.
• On the expenditure side, much of the analysis is
  confined to identifying and quantifying
  expenditures that largely benefit women.
  Analysis should go much beyond that. Adopt
  general equilibrium at least differential
  incidence approach Very little information has
  been generated. Identification of programs that
  would empower women, advancing advocacy to
  include them in plans and including them in the
  budgets should be the strategy.
• Very little work on the gender implications of
  tax policy.
• It is also important to being in gender
  perspective to borrowing policies.

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GRB in Macropolicy Policy relate to Labor
Market

• Research in the area of labor economics has long
  recognized differences average unemployment,
  labor participation, and wage rates, and to
  cluster in different occupations.
• STATISTICAL INVISIBILTY OF CARE ECONOMY Time Use
  studies indicate that women have higher total
  work hours than men, largely as a result of the
  higher burden of housework for women, and that
  this is especially pronounced in the least
  developed economies. In aggregate, the unpaid
  economy is an important component of the overall
  economy. Some estimates suggest that if it were
  properly measured, it could add as much as
  one-quarter to measures of national output .

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GRB in Macro Financial Policy

• Access to credit at reasonable rates to women is
  important.
• Gender inequality also has implications for the
  ability of women to benefit from financial
  liberalization. In recent decades, domestic and
  international financial liberalization has
  changed financial markets.
• Beyond the microcredit initiatives, studies have
  looked at the effect of financial liberalization
  through the prism of gender, focusing on its
  effects on overall growth, labor markets, and
  access to credit.

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Financial Meltdown and Gender Perspective for
Developing Countries

• Financial meltdown and access to credit for small
  and medium enterprises and micro credit
  institutions.
• Falling exports and impact on textiles
  (Bangladesh, Malaysia), floriculture (Uganda,
  Thailand), tourism, IT and ITEs, Gems and
  jewellary, construction.
• Declining remittances and impact on woemn.
• Declining employment and hardship to women.

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Concluding Remarks

• We do not know many things
• Much of the macroeconomic policy calibration and
  analysis assumes that policies are gender neutral
  they are actually gender blind
• In order to show that much more work needs to be
  done and information needs to be gathered.
• We know very little about gender dimension of
  macro policies fully. Ritualistic preparation of
  gender Budgets will not service the purpose.
• Much more research has to go into the area of
  unraveling gender dimension in various macro
  policies, incidence of tax and benefits and
  simply collecting the required volume of
  information.
• The effort should begin at the local level.