Gender Equality and Economic Development : The Role for Information and Communication Technologies

Gender Equality and
Economic Development
The Role for Information and
Communication Technologies


Derek H. C. Chen *

The Knowledge for Development Program
The World Bank
Washington DC 20433


Abstract
This paper focuses on the role that information and communication technologies
(ICTs) can play in improving gender equality, so as to enhance long-term economic
growth. Employing OLS and IV panel regressions with country fixed-effects, the
paper shows that increases in the level of ICT infrastructure tend to improve gender
equality in education and employment. In addition, it shows that education among
the general population is important for improving gender equality. The results
provide evidence indicating that gender equality in education is an important
contributor to gender equality in employment. Lastly, the results show that
economic development itself tends to lead to some improvements in gender
equality in the labor market. Hence, the use of ICTs to improve gender equality in
education and employment may initiate a continuous cycle of positive reinforcing
feedback effects between gender equality in employment and economic
development, leading to further improvements in both.


World Bank Policy Research Working Paper 3285, April 2004
The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the
exchange of ideas about development issues. An objective of the series is to get the findings out quickly,
even if the presentations are less than fully polished. The papers carry the names of the authors and should
be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely
those of the authors. They do not necessarily represent the view of the World Bank, its Executive Directors,
or the countries they represent. Policy Research Working Papers are available online at
http://econ.worldbank.org.

*The Knowledge for Development Program of the World Bank Institute. I am grateful to Carl
Dahlman for suggesting this research topic.

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Gender Equality and Economic Development: The Role for ICTs
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Table of Contents

1. Introduction


2.
Gender Inequality Around the World


3.
Gender Inequality and Economic Development


4.
ICT and Gender Inequality
4.1
ICTs and Economic Development
4.2
Improving Gender Equality with ICTs

5.
Other Determinants of Gender Inequality
5.1
Determinants of Gender Inequality in Education
5.2
Determinants of Gender Inequality in Employment

6. Empirical
Methodology
6.1
Definitions of Variables and Sources of Data
6.2 Econometric
Methodology

7. Estimation
Results
7.1
Gender Inequality in Education
7.2
Gender Inequality in Employment

8. Concluding
Remarks


References

Figures

Tables

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1. Introduction

It has become widely understood that promoting gender equality is an essential
component of an effective economic and human development strategy. For example,
World Bank (2003a) reports:

“There is now a shared understanding within the development
community that development policies and actions that fail to take gender
inequality into account and fail to address disparities between males and
females will have limited effectiveness and serious cost implications.”

World Bank (2003a), p. 4

Historical data reveal that there is a statistically significant positive association
between gender equality in education and economic development. Figure 1 presents the
scatter plot and the linear regression line of the ratio of female to male literacy rates in
year 2000 against the level of per capita GDP (PPP adjusted) in 2000. It can be seen that
the ratio of female to male literacy rates tends to be positively associated with levels of
GDP per capita. Similarly, Figure 2 shows that an alternative measure of gender
inequality in education, the ratio of female to male students in primary and secondary
schools, also tends to have a statistically significant positive association with economic
development.

Further, Abu-Ghaida and Klasen (2002) provides empirical evidence indicating
that a country failing to close the gender gap in education could experience a decrease in
per capita income by 0.1 to 0.3 percentage points. Similarly, the Arab Human
Development Report 2002 concludes that the low empowerment of women is one of the
factors that have seriously hampered human development in the region over the last three
decades (United Nations, 2002). In view of the above, issues surrounding gender
equality need to be addressed for effective and sustainable economic and human
development.

Given the importance of gender equality to economic development, this paper
focuses on improving gender equality in education and employment using information
and communications technologies (ICTs). With their ability to overcome geographical
boundaries and relatively low access costs, ICTs have revolutionized the transfer of
information and knowledge around the world. Enabling women to acquire education
through distance learning, or allowing women to telecommute and hence participate in
the labor market from their homes are just two common examples of how ICTs can help
in improving gender equality. Using five different indicators of the level of the ICT
infrastructure and estimating OLS and IV panel regressions with country fixed-effects,
this paper presents robust results indicating that improvements in the ICT infrastructure

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Gender Equality and Economic Development: The Role for ICTs
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tend to improve gender equality in education and employment. Further, this paper also
shows that reducing gender inequality in education also reduces gender inequality in
employment, which implies that improving ICT infrastructure or ICT availability
improves gender equality in the labor market via both direct and indirect means.

This paper is laid out as follows. Section 2 reviews the status of gender inequality
around the world, and shows that while the situation is improving, gender inequality still
persists in all regions of the world. Section 3 reviews the literature documenting
empirical evidence of the effects of gender inequality on economic development. This
section also presents the various channels via which gender inequality in education and
employment tends to reduce economic growth. The various characteristics of ICTs, and
how a higher level of ICT infrastructure facilitates economic development and improves
gender equality are discussed in Section 4. Section 5 briefly mentions the other possible
determinants of gender equality in education and employment. Section 6 presents the
definitions of variables used in the regressions, and a description of the econometric
methodology. The main estimation results are highlighted in Section 7 and Section 8
provides some concluding remarks.



2.
Gender Inequality Around the World

World Bank (2001) reports that gender inequality in various forms is still
prevalent around the world. Using an index of gender inequality, Figure 3 illustrates the
persistence of gender inequality in basic rights in every region of the world, including the
developed OECD countries1. It should be noted that gender equality in basic rights tends
to be weaker in the poorer regions of the world. This indicates that gender equality tends
to improve with economic development, a point that will be revisited below.

Figure 4 focuses on gender inequality in education and presents the female to
male ratio of the youth literacy rates of the various regions. It can be seen that from 1990
to 2002, the ratio has been consistently increasing in all regions of the world, indicating
an improvement in gender equality in education. Note that gender equality in education
in the South Asia, Sub-Saharan Africa and the Middle East and North Africa regions has
been consistently below the global average. In the 2002, the ratios were 79 percent, 89

1 The rights indicator is an average of three indexes of gender equality in rights collected for more than 100
countries by Humana (1992). The individual rights indexes focus on gender equality of political and
legal rights, social and economic rights, and rights in marriage and in divorce proceedings. The
indexes are constructed using a consistent methodology across countries in which the extent of rights
is evaluated (on a scale of 1 to 4) against rights specified in several human rights instruments of the
United Nations.

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Gender Equality and Economic Development: The Role for ICTs
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percent and 87 percent in South Asia, Sub-Saharan Africa and Middle East and North
Africa, respectively.

Figure 5 presents another indicator of gender inequality in education: the ratio of
female to male students in primary and secondary schools. As with the ratio of youth
literacy rates, all regions show an increase in the student ratio in the previous decade,
which again depicts an improvement in gender equality in education. This measure also
reveals South Asia, Sub-Saharan Africa, and Middle East and North Africa to be weaker
in gender equality than the rest of the regions.

An alternative but equally important aspect of gender inequality is that of
employment. Figure 6 indicates that the female share of the labor force for the various
regions of the world. As with the indicators of gender inequality in education, the female
share of the labor force has been increasing in all regions over the period from 1990 to
2002. It is also the case that some regions are more employment gender equal than
others. Even though there has been consistent improvement for the 1990-2002 period,
Latin America and the Caribbean, South Asia and the Middle East and North Africa have
experienced more gender inequality in the labor market than the global average.


In summary, we see that while gender equality in education and employment has
been substantially improving over time, the gender gap still persists in all regions of the
world today. The next section discusses the consequences of not eliminating gender
inequality on economic development.



3.
Gender Inequality and Economic Growth

It was mentioned in Section 1 and that Figures 1 and 2 depict a clear statistically
significant positive association between gender inequality (in education) and the level of
economic development. This section will discuss one possible direction for the positive
association: improvements in gender equality lead to higher levels of economic
development. Hence, this section will briefly review the existing empirical evidence
indicating that gender equality tends to exert positive effects on economic growth.
Various possible channels via which gender equality can affect economic growth will
also be explored.

In recent years, the literature has produced evidence indicating the gender
inequality tends have a negative effect on economic development. For example, Klasen
(1999) finds that if countries of South Asia, Sub-Saharan Africa and the Middle East and
North Africa had achieved gender equality in schooling during the period 1960 to 1992 as
rapidly as in the East Asian countries, their income per capita could have grown by an

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additional 0.5 to 0.9 percentage point per year. For Africa, this would imply an almost
doubling of per capita income growth.

Similarly, Dollar and Gatti (1999) examine the relationship between gender
inequality in education and growth. Using data for over 100 countries, five-year growth
intervals and two-stage least squares estimation, they find that larger female secondary
education attainment tends to lead to higher growth rates, while male secondary
achievement tends to lead to smaller growth rates. Alternatively, Hill and King (1993),
using panel regressions for 152 countries during the period 1960-85, find that gender
inequality in education has effects on the level of aggregate output. They find that a low
female-male primary and secondary school enrollment ratio is associated with a lower
level of GNP, even after controlling for the effects of female education on GNP.

The reasons for the negative effects on gender inequality on economic
development are still disputed. However, there various channels put forth via which
gender inequality in education and employment can have negative effects on economic
development. As argued by Klasen (1999), three such possible channels are the selection
distortion factor, the environment effect and the demographic transition effect.

The Selection-Distortion Factor

Assuming that boys and girls have very similar distribution of innate abilities,
gender inequality in education must imply that less talented boys are able to acquire
formal education, holding constant the capacity of schools. This consequently implies
that the average innate ability of those who get educated is lower than it potentially
would have been if boys and girls received equal educational opportunities. It thus
follows that the resultant productivity of the labor force would be lower than the labor
force productivity that would have been achieved, if there were no gender gap in
educational enrollment. This lower labor productivity would in turn result in a lower rate
of economic growth.2 Klasen (1999) suggests viewing this factor as similar to a
distortionary tax on education that leads to a misallocation of education resources and
thus lowers economic growth. In addition, a less productive workforce tends to decrease
the rate of return to capital, which would consequently lower the investment rate and thus
further lowering the rate of economic growth.

Similarly, gender inequality in employment generates a selection-distortion factor
that operates at the level of the labor force. Gender gaps in employment tend to result in
lower average labor force productivity than in the absences of such gender inequality in
employment. As above, lower labor productivity tends to lower economic growth
directly and indirectly via lower investment rates. (Figure 7)

2 It should also lower the impact that male education has on economic growth and raise the impact of
female education, as seen in Dollar and Gatti (1999).

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Gender Equality and Economic Development: The Role for ICTs
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The Environment Effect

It has been documented that female education tends to improve the quantity and
quality of education of children via the support and general environment an educated
mother can provide her children. As such, because there would be effectively less female
education at each level of male education, gender inequality in education has negative
effects on the quality of overall education of the population, and consequently the labor
force. In addition, there is some evidence indicating that similarity in educational levels
at the household level tends to generate positive external effects on the quality of
education. For example, as argued in Klasen (1999), it is likely that equally educated
siblings can strengthen each other’s educational success through direct support and play
inspired by educational activities. Similarly, couples with similar educational levels may
promote each other’s life-long learning. In summary, having relatively more educated
women tends to improve the intellectual environment at home, leading to a more
productive workforce and higher economic growth. (Figure 7)


The Demographic Transition Effect

It is been found that high female education is one of the significant causal factors
of fertility decline. This is because educated women tend to marry at a later age and also
tend to increase the time intervals between pregnancies, and consequently giving birth to
a smaller number of babies. Studies, such as Bloom and Williamson (1997), have also
found that that lower fertility rates initiates a process known as the demographic
transition, which may give rise to a transitory increase in the rate of economic growth via
a sequence of events. First, reduced fertility tends to lower the youth dependency
burden3 and the total dependency burden4, which tends to increase the supply of
aggregate savings within an economy. Second, lower fertility rates tend to over time
result in a larger working-age population share because of previously high population
growth. The resultant larger labor force will boost economic growth and investment
demand. This higher investment demand, together with the aforementioned increased in
domestic savings, will result in an increase in the investment rate, which should again
increase economic growth.

3 The youth dependency burden is defined as the ratio of the number of youths to the number of people in
the working-age population. More specifically
persons of ages 14 years and younger
Youth Dependency Burden
=

persons of ages between 15 and 64
4 The total dependency burden is defined as the ratio of the number of youths and the elderly to the number
of people in the working-age population. More specifically
Total Dependency Burden
=
(persons of ages 14 years and younger )+ (persons of ages 65 years and older )
persons of ages between 15 and 64

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In light of the above, lower gender inequality in terms of higher female education
would indirectly lead to a transitory increase in economic growth via demographic effects
(Figure 8).



4. Information and Communication Technologies and
Gender Inequality


Information and communications technologies in recent years have been
recognized as an effective tool for promoting economic growth and sustainable
development. With relatively low usage costs and its ability to overcome distance, ICTs
have revolutionized the transfer of information and knowledge around the world.

The World Bank Group defines ICT to consist of hardware, software, networks,
and media for collection, storage, processing transmission, and presentation of
information in the form of voice, data, text, and images. They range from the telephone,
radio and television to the Internet (World Bank, 2003b and c). On the other hand, the
OECD defines ICT sectors as a combination of manufacturing and service industries that
capture, transmit and display data and information electronically. Table 1 lists the ICT
producing sectors under the OECD definition.


4.1 ICTs and Economic Development


Over the decade, there been a series of studies that show that both ICT
production and ICT usage have contributed to economic growth5. ICT producing sectors
have experienced major technological advancements, which have showed up as large
gains in total factor productivity at level of the economy. As for the non-ICT producing
sectors, investment in ICT has resulted in capital deepening, and hence increases in labor
productivity. More importantly, various studies have produced empirical evidence
suggesting that substantial productivity gains have been experienced from ICT usage6.

5 See Pilat and Lee (2001), Jorgenson and Stiroh (2000), Oliner and Sichel (2000), Whelan (2000), and
Schreyer (2000).
6 Some national studies point to the use of ICT as an important factor in improved TFP growth. For the
United States, the Economic Report of the President (Council of Economic Advisors, 2000, 2001),
Whelan (2000), Oliner and Sichel (2000) and Jorgenson and Stiroh (2000) attribute a considerable
part of the increase in TFP growth to ICT-using sectors of the economy that do not produce ICT. For
Australia, there is evidence that increased productivity has been accompanied by greater technology
use, which includes use of ICT (Productivity Commission, 1999). There are also sectoral and firm
studies that suggest that ICT investment has had positive impact on TFP. For examples in the
distribution sector, see Readon et al. (1996), and Broersma and McGuckin (1999), while Brynjolfsson

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One of the most obvious benefits associated with ICT usage is the increased flow
of information and knowledge. Because ICTs allow information to be transmitted
relatively inexpensively and efficiency (in terms of cost), ICT usage tends to decrease
reduce uncertainty and transactions costs of participating in economic transactions. This,
in turn, tends to lead to increase in the volume of transactions leading to higher level of
output and productivity. Moreover, with the increased flow of information, technologies
can be acquired and adapted more easily again leading to increased innovation and
productivity.


Apart from increasing the supply of information and knowledge, ICTs are able to
overcome geographic boundaries. Therefore, as international buyers and sellers are
increasingly able to share information, reduce uncertainty, reduce transactions costs,
increase competitiveness across borders, all of which results in a more efficient global
marketplace. Also, production processes can be outsourced, based on comparative
advantage, across national boundaries resulting in further global efficiency gains. Market
access and coverage also tend to expand, along with increased access to global supply
chains.


With the increased information flows, ICT availability and usage tends to allow
greater transparency, accountability and accessibility in the delivery of public services.
In addition, the public becomes informed of their rights and increases their awareness of
political and development processes that influence their lives. The informed constituency
is thus able to pressure policymakers to be responsive to their interests and demands.
Also, better institutions and governance has been shown to be a substantial factor in
increasing long-term economic growth.


4.2 Improving Gender Equality with ICTs7


The unique characteristics of ICTs that have enabled it to be an effective tool for
economic development also make them an effective mean through which gender equality
can be improved. There are several ways in which an established ICT infrastructure or a
high level of ICT availability can lead to improvements in gender equality.






and Kemerer (1996) and Gandal et al. (1999) indicate the existence of spillover benefits from ICT
capital at the firm level.
7 This section on the ways in which ICTs can improve gender equality borrows heavily from World Bank
(2003c).

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Influencing Public Opinion on Gender Equality

Given that ICTs allow an increased flow of information and knowledge, increased
availability and use of ICTs allow increased exposures to the customs, norms and
practices of other cultures and societies. This in turn tends to increase awareness of
issues surrounding gender inequality. As such, ICTs can be an invaluable tool in
positively changing people’s attitude, including women themselves, towards women by
disseminating educational programs on gender equity. In addition, increased pressure
from an informed constituency that are sensitive to gender inequality issues can also
induce policymakers to include gender as an important component of their social and
economic policies.


Increasing Educational Opportunities for Females

Education tends to reduce gender inequality as it tends to broaden one’s views,
reduce ethnocentricity, and thus increase one’s flexibility of accepting new customs and
norms. Female education is especially important in societies where gender biases that
dictate solely domestic roles for women. Lack of schooling in such cases tends to
perpetuate gender disparities.

ICTs are able provide innovative ways for women to obtain and update their skills
so as to enable them to participate fully and on a more equal bias in the economy. For
example, ICTs allow various types and levels of education to be acquired through
distance learning. Flexibility of access and study times and the potential to reach women
in rural areas and/or women facing social barriers that limit their access to schools, make
distance learning via ICT a promising educational approach for women. At the same
time, education is also very important in improving the ability of women in developing
countries to take full advantage of the opportunities offered by ICTs, especially those
related to information technology. Currently, because of their low educational levels and
limited access to scientific and technical education, many women in countries with strong
gender biases tend to be poorly placed to reap the full benefits of these modern facilities.


Increasing Economic Opportunities for Women

ICT may open economic opportunities for women in cultures where they are
expected to stay at home and are not permitted to have face-to-face contact with men
other then close family, or to travel. In such cases, telephones, computers and the
Internet allow women to telecommute, and hence work and interact with men without
face-to-face contact, and even without being in the same place (Daly, 2003). Note that
ICTs are useful for telecommuting even in cultures where domestic roles are not imposed
on women. For example, many women in industrial countries that are gender egalitarian

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