Economic Research Forum (ERF)

Fair competition is needed to empower women economically in the Arab world

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The participation rates of women in the labour market in Arab countries are the lowest in the world. This column argues that remedying the under-representation of women in the labour force is a social and economic imperative for the region. There are three dimensions for action to realise the potential of Arab women: amending laws and regulations; instilling fair competition in markets; and promoting the digital economy.

In a nutshell

Arab countries are in the middle of massive social and economic transitions: empowering women is at the heart of both these transitions.

To succeed, Arab countries should make a whole-hearted effort in laws and regulations, competition and technology.

International financial institutions, donor countries and other development partners can help Arab countries, not only by supporting changes in laws and regulations, but also by promoting fair competition and helping them move to modern, digitalised economies.

The participation rates of women in the labour market in Arab countries are the lowest in the world. This is despite the rising educational attainment of young women reaching working age, who are exceeding the education levels of young men across the Arab world. Remedying the under-representation of Arab women in the labour force and reviving the educational motivation of the young men who are falling behind are both social and economic imperatives.

Historically, countries such as France, Japan, Norway, the UK and the United States have realised the power of women entering the labour force. They have benefited greatly in terms of wealth creation and a sense of shared opportunities.

These changes in the labour market have often come on the heels of big social movements – not unlike those in 2011 at the onset of the Arab Spring and today in Algeria, Egypt and Sudan. In all of these countries, men and women demonstrated hand-in-hand for more social and economic freedom.

To realise the potential of Arab women, there are three dimensions for action.

Laws and regulations

First, countries must amend laws and regulations that have discriminated against female labour force participation and women’s basic economic rights. In recent decades, some countries in the Arab world have made strides in adopting legislations that went against the social tide and shook up centuries-old, legal impediments to women’s rights.

The 1956 Tunisia personal status code gave women rights equal to those of men in all areas of civil and public life. A number of other countries followed suit, including Saudi Arabia, which most recently allowed women to drive and travel more freely.

But much remain to be done, including in changing inheritance laws, which, as they stand today, put women’s access to capital and entrepreneurship in jeopardy. These changes are urgently needed, as these laws are often a pretext for discrimination against women, including in lagging areas.

But changing laws does not necessarily immediately change behaviour. Even as laws and regulations change, women, including those who are highly educated, encounter very few opportunities in the formal sector because rising debt levels and anaemic growth result in shrinking public employment. Public spending, historically the region’s engine of development, has reached its limit.

This means that most employment opportunities for women are in the informal sector, which is perceived as unsafe and has very few social protections. The failure of public transport in many countries in the region has become a key impediment to freedom of movement for women. Enforcement of safety standards and anti-harassment policies must become a national priority in Arab countries to protect women.

Fair competition 

Second, countries must instil fair competition in markets. Although this does not directly target discrimination against women, it speaks to a fundamental flaw in Arab economies: their inability to generate good jobs and to integrate women into the labour force, which is the result of almost impenetrable barriers to firms entering or leaving crucial markets – or, as economists put it, the lack of ‘contestability’.

These economies have favoured incumbent firms, whether private sector or state-owned. The lack of contestability leads to cronyism and what amounts to rent-seeking activities, where firms have little thirst for talent and investment, including research and development.

To create demand for increasingly educated women, the wall of vested interests in Arab countries must be torn down. In practice, the teardown could translate into the creation and reinforcement of regulatory watchdogs to champion competition.

Arm’s length regulation that fosters competition and fights anti-competitive practices could prevent the perpetuation of oligarchies – the powerful few who often seize control of liberalisation attempts, with the unfortunate result that the idea of reform is sullied among the citizens.

International financial institutions, donor countries and other development partners can help Arab countries, not only by supporting changes in laws and regulations, but also by helping them move to modern, digitalised economies.

In a coordinated fashion, they should raise the issues of contestability and the need for credible and independent local bodies to promote competition as a step towards building more inclusive societies. To ensure progress, the partners could condition assistance on pro-competitive steps and provide technical expertise in the institutional design of competent and independent national and regional regulatory bodies.

The digital economy

Third, Arab countries must enhance technology to unleash the potential of young women and men. The digital economy can help to develop platforms that not only provide new offerings on education, transport and access to finance – including for women – but also allow more flexible work from any location, including those regions that lack job opportunities.

But the digital economy is in its infancy and young people face obstacles in putting technology to productive use. To make the digital economy more accessible to their youth, Arab countries must create a modern broadband internet that covers all regions, including those that are lagging economically.

In those lagging areas, the model of India could be followed, in which internet access is offered free for a while to enhance its beneficial economic and job-creating effects. These countries must develop an infrastructure and regulatory apparatus that supports money transfer digitally through mobile devices and the internet.

Conclusion

Arab countries are in the middle of massive social and economic transitions. Empowering women is at the heart of both these transitions. To succeed, Arab countries should make a whole-hearted effort in laws and regulations, competition and technology.

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