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Women Leaders to Bring a Fresh Perspective to Economic Policy

Women now hold many of the jobs controlling the world’s largest economy – and they are trying to fix it. Over the past half-century, 57 women have been president or prime minister of their countries but institutions that make economic decisions have largely been controlled by men until recently.
Outside the US, there is Christine Lagarde at the helm of the European Central Bank with its 2.4 trillion-euro ($2.8 trillion) balance sheet, Kristalina Georgieva at the International Monetary Fund (IMF) with its $1 trillion in lending power, and Ngozi Okonjo-Iweala at the World Trade Organization – all jobs held by men 10 years ago.

Overall, there are women running finance ministries in 16 countries and 14 of the world’s central banks, according to an annual report prepared by OMFIF, a think-tank for central banking and economic policy.

The limited measures available suggest women have a better track record of managing complicated institutions through crises. “When women are involved, the evidence is very clear: communities are better, economies are better, the world is better,” Georgieva said in January, citing research compiled by the IMF and other institutions.

“Women make great leaders because we show empathy and speak up for the most vulnerable people. Women are decisive … and women can be more willing to find a compromise.”

A study by the American Psychological Association showed that US states with female governors had fewer COVID-19 deaths than those led by men, and Harvard Business Review reported that women got significantly better ratings in 360-degree assessments of 60,000 leaders between March to June 2020.

Women account for fewer than 2 percent of CEOs at financial institutions and less than 20 percent of executive board members but the institutions they do run show greater financial resilience and stability, IMF research shows.

 

Treasury Secretary Janet Yellen, Commerce Secretary Gina Raimondo and trade tsar Katherine Tai hold top jobs in United States President Joe Biden’s administration and many of his economic advisers also are women, as are nearly 48 percent of his confirmed cabinet-level officials.

Women leaders can bring a fresh perspective to economic policy, experts say. “When you’re different from the rest of the group, you often see things differently,” said Rebecca Henderson, a professor at Harvard Business School and author of Reimagining Capitalism in a World on Fire.

“You tend to be more open to different solutions,” she said and that is what the situation demands. “We’re in a moment of enormous crisis. We need new ways of thinking.”

This sea change may already be affecting economic policy – a new $2.3 trillion spending plan introduced by Biden last week includes $400bn to fund the “care economy,” supporting home- and community-based jobs taking care of kids and seniors, work normally done by women that have mostly gone unacknowledged in years past.

The plan also has hundreds of billions of dollars more to fix racial and rural-urban inequalities that were created in part by past economic, trade and labour policies.

Yellen says the focus on “human infrastructure,” and the earlier $1.9 trillion rescue bill should result in significant improvements for women, whose share of the workforce had hit 40-year lows even before the crisis and for everyone else as well.

“In the end, it might be that this bill makes 80 years of history: it begins to fix the structural problems that have plagued our economy for the past four decades,” she wrote on Twitter, adding, “This is just the start for us.”

The rise of female leaders should lead to “a more inclusive – in the true sense of the word – response to the many, many challenges that are the legacy of COVID,” Carmen Reinhart, the World Bank’s chief economist, told the Reuters news agency.

Tai, the first woman of colour to lead the US Trade Representative’s office, has told her staff to think “outside the box”, embrace diversity and talk to communities that have been long ignored.

Okonjo-Iweala, also the first African to head the World Trade Organization, which oversaw trade flows of nearly $19 trillion in 2019, said addressing the needs of women will mark an important step towards rebuilding deeply eroded faith in government and global institutions.

“The lesson for us is (to) make sure … that we don’t sink into business as usual,” said Okonjo-Iweala, who was also Nigeria’s first female finance minister. “It’s about people. It’s about inclusivity. It’s about decent work for ordinary people,” she told Reuters.

By Jumana Jabeer

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