MIL-OSI Economics: Development Asia: Promoting Gender-Inclusive Growth Through Regional Integration

Source: Asia Development Bank

The Impact of Economic Opportunities for Women

Expanding economic opportunities for women trigger widespread benefits. In South Asia, equal employment opportunities for men and women could enhance incomes by 25% and increase intraregional trade of $44 billion. Despite progress in education and health outcomes, low women’s economic participation remains a major issue . In 2021, women’s labor force participation was 22%  in South Asia and 32%  in Sri Lanka, while other regions, except the Middle East and North Africa (18%), surpassed 50%. Also, a 27%  gender wage gap indicates that women in Sri Lanka earn about 20% less than men. Achieving gender parity in South Asia will take 149 years, compared to 67 years in Europe and 95 years in North America.

Challenges and Opportunities in Regional Integration

Unlike South Asia, regions like East Asia, Europe, and North America harness the benefits of regional integration by developing strong relationships with their neighbors. Intraregional trade make up 50% of total trade in East Asia and 22% in Sub-Saharan Africa but only 5% in South Asia. In South Asia, intraregional trade accounts for just  1% of regional GDP,  compared to 2.6% in Sub-Saharan Africa and 11% in East Asia and the Pacific.

South Asia’s regional integration is restricted by high tariffs, non-tariff measures, lack of trust and political will, weak policy implementation, and inadequate infrastructure. Deeper regional integration offers benefits like cheaper goods for consumers, better access to inputs, and expanded market access for producers and exporters.

Reforming Regional Integration for Gender-Inclusive Growth

To promote gender-inclusive growth, it is essential to improve the lagging dimensions of regional integration. This process is complex and varies by country due to its multidimensional nature. The six key dimensions are trade and investment, movement of capital, regional value chains, infrastructure and connectivity, people’s mobility, and legal and institutional basis for international policy cooperation.

Balanced progress across these dimensions leads to stronger regional integration and higher women’s economic participation. The EU, with the most evenly distributed dimensions, is the most integrated regions, with more than 50% women’s participation in the workforce.

Figure 1: Heterogeneity in the Contribution of Multiple Dimensions of Regional Integration

NOTE: Regions with the most evenly distributed dimensions have the highest women labor force participation, e.g., the European Union.

SOURCE: C.Y. Park and R. Claveria. 2018. Does Regional Integration Matter for Inclusive Growth? Evidence from the Multidimensional Regional Integration Index. ADB Economics Working Paper Series. No. 559. Asian Development Bank.

In contrast, South Asia’s uneven dimensional distribution makes it one of the least integrated and lowest women’s economic participating regions. South Asia prioritizes infrastructure, and connectivity and movement of people, and less on money and finance. Similarly, Sri Lanka has focused heavily on infrastructure, with 60% of public investment directed toward it in recent decades.

Table 1: Identifying Specific Dimensions of Regional Integration Toward Gender-Inclusive Growth

NOTE: The Multidimensional Regional Integration Index (MDRII) provides a cumulative score across six dimensions: 1) Trade and Investment, 2) Money and Finance, 3) Regional Value Chain, 4) Movement of People, 5) Infrastructure and Connectivity, and 6) Institutional and Social Integration. A higher score indicates better integration. Dimensions with scores below 0.4 require significant reforms to ensure that regional integration promotes gender-inclusive sustainable growth.

Author’s calculations basis:  C.Y. Park and R. Claveria. 2018. Does Regional Integration Matter for Inclusive Growth? Evidence from the Multidimensional Regional Integration Index. ADB Economics Working Paper Series. No. 559. Asian Development Bank.

Strengthening institutional and social integration, alongside improvements in money and finance, could reduce gender inequality by nearly 50% in South Asia. Enhanced mobility and institutional and social integration benefit women in industry and services but not in agriculture. In developing countries, women often work in low-skilled, labor-intensive, low-skilled, and low-paid sectors—referred to as the “feminization of labor.” Regional integration can reverse this trend by increasing employment in manufacturing and services, resulting in higher wages and demand for women labor. 

In contrast, trade and integration negatively impact women in agriculture due to limited skills and mobility. Regional integration alters the production structures, where sectors with export potential grow, and import-dependent sectors shrink. Women in shrinking sectors may face job losses, and gender segregation can limit their benefits in growing sectors. Opening specific sectors and providing opportunities for upskilling and reskilling women can mitigate these negative effects.