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Trade, an unexpected ally to reduce the gender gap

Fruit processing plant in Neuquén, Argentina.José Ignacio Coda / World Bank /

Is there a relationship between the countries most open to international trade and gender equality? As random as this association may seem, the answer is yes, and so the recent World Bank study states, Women and Trade: The Role of Trade in Advancing Women’s Equality.

When countries exchange goods and services, women win. Companies that export employ more women (33% more than those that do not), pay them more and offer them more opportunities for professional development, according to the report.

In this way, trade becomes an unthinkable ally for women to reinvent their traditional roles thanks to the fact that the companies that employ them are embedded in global value chains, and as such, have an important role in the digital economy and the modernization of services.

With greater trade openness, the share that corresponds to women in manufacturing sector wages increases on average 5.8 percentage points. And when women work in high-export sectors, they are more likely to be formally hired. A formal job means better job benefits, training and job security, which is key in times of pandemic.

But trade alone cannot change the fact that women receive lower wages than men, suffer worse hiring conditions, and are the first to suffer unemployment.

In fact, in Latin America and the Caribbean, women are more exposed to informal employment in almost 75% of countries, according to the International Labor Organization. Our region also tends to be specialized in commodity trading, unlike other regions, which have a more sophisticated trading share.

In the report Trade integration as a path to development? Also from the World Bank, prepared by the Office of the Chief Economist for Latin America and the Caribbean, explains that the region has relatively low integration in international trade and value chains. And while all preferential trade agreements result in a higher level of bilateral trade between their members, only the south-north agreements show greater economic advantages for the signatory developing countries.

In many countries, laws, hidden fees, and restrictive policies condition your potential in the labor market, your wages, and your ability to consume. What’s worse, unexpected crises, such as the Covid-19 pandemic, can further accentuate the fragility of women in the labor market.

However, trade alone cannot account for the fact that women are underpaid and underrepresented at work.

The report, prepared in collaboration with the World Trade Organization, is the first major initiative aimed at quantifying the impact of trade on women. This analysis was conducted with the idea of ​​helping governments see how trade policies can affect men and women differently.

Maria Victoria Ojea is an online producer for the World Bank.