Trade and gender connection
Trade liberalization has been a significant stimulus to economic growth and prosperity around the world, including here in Canada. However, trade affects people differently, based on a wide range of factors, including gender. In this context, the link between trade and gender is an important issue for trade policy-makers to consider as they negotiate free trade agreements (FTAs).
Incorporating gender perspectives into macroeconomic policy, including trade policy, is key to pursuing inclusive and sustainable economic development and to achieving outcomes that are fairer and more beneficial for all. Studies have shown that women-owned businesses contribute $150 billion to the Canadian economy and employ over 1.5 million people. Advancing women’s equality in Canada could add $150 billion to the GDP by 2026. To ensure that the benefits of free trade can be maximized and widely shared, it is important, therefore, for Canada to consider gender-related issues when developing trade policy and negotiating FTAs.
Canada’s approach to trade and gender is also consistent with the Government of Canada’s broader commitment to advancing gender equality and women’s economic empowerment and complements its efforts to advance gender equality both at home and abroad.
Trade and gender and the impact on workers
Trade can impact women and men differently, whether as workers or entrepreneurs or, more generally, as members of society.
For example, in Canada, women are overrepresented in lower-growth and lower-wage industries, such as retail trade, and in non-tradeable services, such as accommodation and food services. In comparison, men dominate high-trade sectors, such as manufacturing and resource extraction.
Women, in contrast, account for a larger share of the workforce in service and knowledge-based sectors, such as financial services, e-commerce and telecommunications, which are expanding and in which Canada has a comparative advantage.
Therefore, trade policies can have different effects on women and men as workers, depending on the sector in which they are employed and whether that sector is likely to expand or contract as a result of an FTA. Because of this, trade policies need to take gender-related factors into account during FTA assessments and negotiations to understand the risks and opportunities on particular demographics in the economy.
Trade and gender and the impact on business owners
Even though women start businesses at a greater rate than men, women-owned businesses account for less than 16% of small and medium-sized enterprises (SMEs) in Canada and only 11% of all exporters. Education and managerial experience are key determinants of whether SMEs export. While women who own SMEs are generally more educated than their male counterparts, they also tend to have less managerial experience. This suggests that there are barriers to exporting other than education for women-owned SMEs.
Research has identified the following likely primary factors explaining female under-participation in exporting:
- Firm size: Smaller firms are less likely to participate in trade, and SMEs owned by women tend to be much smaller, on average, and to report lower revenue growth than those that are male majority owned. Women-owned SMEs tend to be survival-oriented businesses rather than wealth-accumulation-oriented firms that lean toward investment as a long-term objective.
- Sectoral concentration: SMEs run by women are more likely to be in service activities that have lower start-up costs and are less likely to export. As well, women-owned businesses tend to be in sectors and industries that are not high growth and are therefore eligible for fewer government supports. Additionally, women entrepreneurs are underrepresented in high-technology manufacturing and knowledge-intensive sectors and disproportionately concentrated in low-value-added services.
- Access: Women may lack access to networks and mentors; information and market intelligence; domestic and global value chains; government and corporate procurement markets; training and skills development, including in financial literacy; e-commerce and digital payments; and financing, including trade financing. In addition, SMEs owned by Canadian women are less likely, compared to those owned by Canadian men, to seek loans and outside investment and more likely to have loan applications rejected on the grounds of insufficient collateral.
- Lower-value-added firms: Canadian women entrepreneurs are less likely than their male counterparts to run high-value-added and growth-oriented enterprises. Far fewer self-employed women (31.3%) than men (50%) incorporate their businesses.
- Time constraints: Many women must balance their businesses with family responsibilities, which limits the time they spend on their businesses and their ability to grow them.
- Discrimination: Women-owned SMEs may encounter implicit and explicit discrimination that limits their growth potential.
- Violence and harassment: Women may encounter violence and harassment when travelling outside of the country, in particular at border crossings. This can affect their ability and willingness to participate in international trade and investment.
Increasing the number of women-owned business exporters is important for a variety of reasons. Evidence shows that SMEs that export, compared to those that don’t, have the following important characteristics:
- They are larger and more productive and innovative.
- They have higher growth and revenues.
- They are more resilient to market shocks.
- They hire more workers, including women and other diverse population groups, and pay higher wages.
- They invest more in research and development, information and communications technologies, and machinery and equipment.
- They invest more in employee training.
Therefore, increasing the number of women-owned SMEs that export has important socio-economic benefits for both society in general and the businesses themselves.
Trade and gender and the impact beyond workers and businesses
In addition to having effects on women as workers and as business owners, free trade can impact women in other ways, as members of society.
For instance, trade can impact women and men differently as consumers, particularly with regard to changes in the prices of imported goods. As women typically earn less than men, the reduction in the prices of goods could have, in relative terms, a more positive impact on their lives than on the lives of men in equivalent circumstances, by freeing up a higher percentage of their disposable incomes.
Given that FTAs reduce tariffs on imported products, government revenues may be negatively impacted, which could lead to reductions in government-funded services and programs. This is particularly the case in emerging markets, where the share of government revenue that comes from tariffs can be larger than in more open economies and could affect women more than men because, evidence suggests, women benefit more from these services.
At the same time, however, FTAs also increase economic prosperity and GDP through business development and expansion, job creation and increased exports. Therefore, what governments lose in revenue as the result of FTA tariff reductions may be counterbalanced by increases in tax revenue.
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