WB: South Asia must explore untapped opportunities

In South Asia, only 20 out of every hundred women actively participate in the labor market, while the labor force participation for men is 80 percent, far below the participation rates in other regions, says a World Bank Report.

The report titled ‘Unlocking growth across South Asia’ said: In the decade before the COVID-19 pandemic hit, South Asia struck a strong growth note of 5 percent per year in per-capita GDP, strongly outpacing other developing regions in the world, notably Latin America and the Caribbean; the Middle East and North Africa; and Sub-Saharan Africa—all of which grew less than 1 percentage point per year. Only East-Asian economies outperformed South Asia at a growth rate of 6.5 percent.

Undoubtedly, South Asia as a region, possesses a powerful growth engine.

Yet, what is striking is that this engine has not been firing on all cylinders, implying that large numbers of people and significant parts of the economy are not participating in the strong growth. In South Asia, only 20 out of every hundred women actively participate in the labor market, while the labor force participation for men is 80 percent, far below the participation rates in other regions.

Between 80-90 percent of the workforce is stuck in unproductive informal sectors that have notoriously limited access to credit and sales markets. The region’s exports of goods—traditionally a source of productivity growth—are only one third of the size of exports when compared to other countries around the world.

From the findings above, it appears that most of South Asia’s economic activity is concentrated in small pockets of societies, namely the formal workforce and male workers mostly employed by formal firms that have access to credit and are largely selling to domestic markets. These segments can grow fast, but this is not the full throttle mode that is required to launch economies to their fullest potential. Therefore, it’s not a surprise that currently, per-capita income in South Asia is only one fifth of the per-capita income in East Asia, a region with a much larger female labor force participation, smaller informal sectors, and an export-led growth strategy.

For South Asia to reach its full economic potential, it must explore untapped opportunities.

The latest  South Asia Economic Focus zeroes in on a possible answer to this conundrum. Using new data from 140 countries, the chapter on gender norms shows that in South Asia, perceptions about the role of women in society have not kept up with new economic opportunities as they have done in many regions of the world.  The analysis shows that these gender norms determine to a large extent, the participation of women in the labor force.

The paradox here is that in most countries, education of girls tends to increase female labor force participation as education increases potential wages, which makes it more attractive to participate in paid work. However, in South Asia, whereas education of girls has improved significantly during these past decades, the participation of women in the workforce has not kept up to speed.  If norms mandate that married women stay at home, then women are likely to withdraw from the labor market after marriage, irrespective of their education level. The latest South Asia Economic Focus also shows that conservative norms in South Asia are associated with other forms of gender inequality as reflected in freedom of movement, asset ownership, access to finance, preference for the male child, and domestic violence.