When gender matters for exports by MENA firms

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Fida Karam and
Chahir Zaki
January 05, 2021

There is considerable evidence that export-oriented strategies have a beneficial impact on growth and development. This column reports research suggesting that enhancing women’s participation in the export sector could be a new source of competitiveness for firms in the Middle East and North Africa.

In a nutshell

Women’s participation and entrepreneurship could play a potentially beneficial role in tradable sectors of MENA economies, provided that firms face fewer regulatory and financial constraints.

Female labour force participation has a significant positive impact on both a firm’s probability of exporting and its export volume, with the effect being independent of the firm’s size.

Management and/or ownership by women have a positive and significant effect on the probability of large firms exporting; the effect is mainly driven by women’s ownership.

In one of the dimensions of unachieved gender equality, increased attention is being directed towards the relatively low participation of women in trade as employees, producers and owners (International Trade Center, ITC, 2015).

Apart from the increased incomes for women that arise from trade liberalisation and that are likely to be spent on children’s education, women may play a crucial role in export competitiveness. Multiple reports from international organisations like the United Nations and the Asian Development Bank highlight the beneficial impact on growth and development of export-oriented strategies in different countries, particularly the Asian tigers.

The role of women’s participation in the success of those export-oriented industries has been considerable (United Nations, 2004):

In the People’s Republic of China, women’s employment in export-oriented manufacturing increased by 2.3 million over just four years after the country’s accession to the World Trade Organization.
In Bangladesh, job creation in the export-oriented garment industry created four million jobs, more than 75% for women who were mostly from poor families and entering the labour market for the first time (Asian Development Bank, 2019).
In the United States, evidence shows that exporting businesses owned by women are on average more than 3.5 times more productive than women-owned businesses that do not export; and that women-owned exporting firms are also about 1.2 times more productive on average than their male counterparts (ITC, 2015).
A comparison of firm-level data among regions shows that women’s participation in exporting firms is highest in Asia and lowest in West Africa. According to the ITC (2015), 35% of exporting firms in Asia employ at least 50% women, while only 11% of West African firms employ more than 50% women and 75% of firms employ less than 20% women.

The Middle East and North Africa (MENA) is ahead of West Africa but with only 24% of MENA firms having a share of women workers exceeding 50%, while women’s participation in the workforce is less than 20% for more than half of MENA firms. In addition, only 21% of exporting firms in MENA are owned or managed by women (ITC, 2015).

In spite of investments in female education, women’s economic participation in the MENA region is low due to interrelated socio-economic, cultural, individual, structural and institutional factors, as well as time barriers that make it difficult for women to effectively engage in the labour force or run a business. In most MENA countries, only a limited number of sectors are considered to be culturally appropriate for women to work or run a business in (ITC, 2015).

Perhaps it is time for a region that is struggling with conflicts and political and economic instability to rely on new sources of competitiveness to stimulate exports and economic growth. Enhancing women’s participation in the export sector could be one such source.

Empirical work on the role of women in the export sector in the MENA region is limited. In a recent study, we try to fill that gap by investigating the effect of women’s entrepreneurship and female labour force participation in the export sector for the MENA region (Karam and Zaki, 2020). Our analysis of women’s labour participation using firm-level data is summarised in three key findings:

First, women are weakly represented in the export sector.
Second, women mainly work in micro firms (those with fewer than five employees) and large companies (more than 100 employees).
Third, women are most likely to work in exporting firms of sectors like garments, telecoms and food in which the region has a comparative advantage.

Our analysis of women management/ownership using firm-level data is summarised in four key findings:

First, one in three exporting firms are led by women.
Second, women entrepreneurship is dominant in export sectors like transport, publishing and printing, garments, plastic and rubber.
Third, women mainly lead in micro firms and large companies.
Fourth, women tend to employ more women.
Against this background, we investigate the effect of women participation and empowerment on the probability of exports for firms (the extensive margin of trade) and the export volume of firms (the intensive margin of trade) in the MENA region.

We show first, that female labour force participation exerts a significant positive impact on both the probability of export and export volume, with this effect being independent of the firm’s size. Furthermore, the effect of female labour force participation on exports is largest in traditional sectors where the MENA region has a comparative advantage.

Second, while the effect of women’s ownership or management is not significant for trade margins, management/ownership by women has a positive and significant effect on the probability of large firms exporting. This positive effect is mainly driven by women’s ownership and not management, and thus sheds light on the potential importance of women’s empowerment in international trade.

Third, we find statistical evidence that the effect of financial constraints as well other regulatory barriers on exports is larger for female-owned/managed firms than for male-owned/managed firms.

Our findings shed light on a potentially beneficial role that women’s participation and entrepreneurship could play in tradable sectors in the MENA region, provided that they face fewer regulatory and financial constraints. Therefore, policy-makers in the MENA region are invited to investigate further the potential benefits of female labour force participation and women’s entrepreneurship in the export sector.

Further research in this direction could enhance an effective contribution of trade policies to growth and development, and support the achievement of gender equality, one of the key objectives of the Sustainable Development Goals (SDG5).

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When gender matters for exports by MENA firms

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