Post on 11-Mar-2020
E.A.MUNC KOZHIKODE 2019
IMF INCREASING TRADE FLOWS
AND WOMEN’S ACCESS TO
FINANCE
INTERNATIONAL MONETARY FUND
(IMF)
TOPIC: INCREASING TRADE FLOWS
AND WOMEN’S ACCESS TO FINANCE
INDEX
Summary
Content And Concept
Aid For Trade Initiative
Women In Finance Service
Conclusion
TOPIC: INCREASING TRADE FLOWS AND
WOMEN’S ACCESS TO FINANCE.
The Global trade flow will continue to embellish well into 2019, but at a
slower pace than expected. The WTO anticipates growth in merchandise
trade volume of 3.8% in 2018, with trade expansion reducing further to
3.7% in 2019. The new forecast for 2018 is below the WTO's 12 April
estimate of 4.6% but falls within the 3.2% to 5.5% growth range. Trade
growth in 2018 is now most likely to fall within a range from 3.4% to
4.4%. Such a decrease in trade flows will ultimately prove disastrous
not only to developing economies but to developed ones too.
Trade flows are perhaps the most important asset of a nation and can be
both a boon and bane. On one hand a trade surplus, reassures the
economy while on the other hand a trade deficit means a weak or aging
economy, resulting in a deteriorating GDP. Thus, increasing trade flows
by addressing many challenges associated with it, is an important step
towards developing a stable global world economy.
There are several trade initiatives carried out at regional levels that have
sought to accelerate economic development and increase trade flows
and have shown limited success. It comprises of initiatives such as The
North American Free Trade Agreement (NAFTA) in North America,
The Trans-Pacific Strategic Economic Partnership Agreement (TPSEP)
between Australia and countries in South America, The European Union
(EU) in Europe, The One Belt One Road initiative in Asia and The
India-Sri-Lanka Free Trade Agreement (ISLFTA).
While initiatives at the regional level have helped to reduce barriers thus
facilitating trade flow. A few key aspects are common, most of these
agreements are bilateral and those that are multilateral are few and far
between.
Acknowledging these limitations, the December 2005 World Trade
Organization Ministerial Conference in Hong Kong paved the way for
the Aid for Trade Initiative, as a complement to the Doha Development
Agenda. The Initiative aims to improve the quantity and quality of Aid
for Trade (Aft), allowing developing countries to access easily the
benefits of WTO agreements.
Along with this in February of 2006 the WTO established a Task Force,
with the aim of “operationalizing” Aid for Trade. The task force focuses
on identifying the needs within recipient countries, replying to donors
and serving as a bridge between donors and developing countries.
Additionally, The WTO through aid for trade, has empowered women
especially in the spheres of trade and finance all over the world.
In the 5th Global Review of Aid for Trade in 2015, The WTO along with
the World Bank Group launched “The Role of Trade in Ending
Poverty” which included a chapter on Women, Trade and poverty. The
publication highlights the gender dimension of extreme poverty. It also
helps in evaluating how integration into global trade can positively
impact women's economic empowerment.
The conclusion from this analysis was that high trade costs have a
significant impact on least-developed countries, particularly on women
traders and on small and medium-sized enterprises.
Result:
Aid for Trade has been in effect for the last 10 years, and in those 10
years it has not moved from its ideals and goals: “Effective aid for trade
should enhance growth prospects, reduce poverty, complement
multilateral trade reforms, and distribute the global benefits of trade
more fairly across and within developing countries”.
More specifically they have:
1) Prioritized Trade
Central to the whole Aid for Trade Initiative is the notion that trade
should be mainstreamed as a priority in the strategies of developing
countries and donor agencies. Most donor agencies have reported that
they have specific aid for trade strategies. Some donors such as
European Commission Germany and the United Kingdom are in the
process of updating their strategies. UNDP of (2011), finds that the
progress has been observed in mainstreaming trade in developing
countries, capacities remain uneven. Recent reviews by the Diagnostic
Trade Integration Studies undertaken by the Executive Secretariat of the
Enhanced Integrated Framework suggested that progress in this area
continues.
2) Attracted to more Official Development Assistance (ODA)…
Prioritizing of trade as a means for economic growth and poverty
reduction was expected to result in securing “additional, predictable,
sustainable and effective financing for building trade capacities in
developing countries”. To assess additionality and ensure accurate
accounting at the global level, aid-for-trade benchmarks were agreed.
These include: official development assistance (ODA) and other official
flows (OOF) to help developing countries elaborate trade strategies,
negotiate trade agreements and implement their outcomes.
Aid for trade CRS categories
3) Reduced Poverty…
A literature review concluded that trade liberalization generally boosts
income and thus reduces poverty, with working in the export sector
predicting gains and, in the import sector, opposing sector losses. A
common finding is that female workers gain from trade liberalization.
For example, targeted aid to building productive capacities in
agriculture and insurance schemes to remove risks that can raise the
productivity of households close to the poverty line. Road reintegration
can also reduce the monopolistic power of traders in remote areas,
thereby raising the incomes of the poor selling agricultural products.
CONCLUSION:
Gender was a cross cutting issue in the Aid for Trade Work Programme
for 2016-17. The monitoring and evaluation exercise revealed that 35%
of the surveyed developing countries and 50% of Aid for Trade donors
considered that Aid for Trade can help achieve Sustainable
Development Goals even in the case of gender equality.
Women’s economic empowerment was the focus of the Aid for Trade
Global Review 2017. On the topic on how to increase the focus on
women’s empowerment and how the initiative controls women, several
key messages were stated:
Women are important for countries' economic growth and
development. Gender equality is key to end life-threatening
poverty and fostering sustainable growth.
Countries need to recognize women's role and potential as
entrepreneurs and should facilitate their access to finance. Women
are “completely in the background”, even though women
entrepreneurs have a 95% repayment rate for loans.
It is important to seal the digital divide for women. The share of
women accessing the Internet is 12% less than the share of men
accessing it. The smallest digital gender divide is in the Americas
(2%), the largest is in Africa (23%) and in least-developed
countries (31%).
WOMEN’S ACCESS TO FINANCE:
CHALLENGES IN EXPANDING WOMEN’S ACCESS TO
FINANCIAL SERVICES:
Women make up around 40 percent of the world’s workforce. Many of
the sectors that are precarious for economic growth in some of the
poorest countries count heavily on women. Small and medium-sized
enterprises (SMEs) with female ownership represent 30% to 37% of all
SMEs (8 million to 10 million women-owned firms) in emerging
markets. These businesses have unmet financial needs of between
US$260 billion and US$320 billion a year. This is their biggest barrier
to growth and development.
Access to credit can open up economic opportunities for women, and
bank accounts can be a gateway to the use of additional financial
services. However, women entrepreneurs and employers face
significantly greater challenges than men in gaining access to financial
services.
The Global Findex , a comprehensive database measuring how people
save, borrow, and manage risk in 148 countries, reveals that women are
less likely than men to have formal bank accounts. In developing
economies women are 22% less likely than men to have an account at a
formal financial institution and 18% less likely to have borrowed
formally in the past year. Even if they can gain access to a loan, women
often lack access to other financial services, such as savings, digital
payment methods, and insurance. Restrictions on opening a bank
account, such as requirements for a male family member’s permission,
restrict women’s access to accounts. Lack of financial education can
also limit women from gaining access to and benefitting from financial
services. In addition, many women may have access to financial
services in name only: A study in Pakistan showed that, although
accounts might be opened in the name of a woman, the decision-making
authority around the use of those funds often lies with a male relative.
The World Bank’s Gender at Work report (2014) asserts: “On
effectively every global measure, women are more economically
excluded than men.”
Through technical/advisory assistance and lending support, the World
Bank Group works to ensure the full potential benefits of financial
inclusion for women are secured by:
Increasing access to finance and markets by associating with
developing countries and financial institutions within those
countries;
Reducing gender-based barriers in the business surroundings
Creating business opportunities for institutions and in the private
sector to improve working conditions for female employees,
market segmentation, and inclusion of women in community
relationships;
Supporting business skills and financial capability trainings for
women; and
Building the business case for equal economic opportunities for
men and women.
An important World Bank-led mechanism to accelerate financial
inclusion through enabling country commitments is the new Financial
Inclusion Support Framework (FISF) which was launched in 2013. The
World Bank has committed to assist at least 10 IDA(International
Development Associating) countries to reach their financial enclosure
targets, including for women’s financial presence, and plans to expand
this support to at least a further 10 IDA countries.
IFC’s Investment Services – including risk-sharing facilities, credit
lines, loans, equity, SME and credit insurance, supply-chain finance and
combined finance – are all products that can improve women’s access to
finance. IFC launched Women’s Finance Hub in spring 2013 – an
online collaborative platform, as part of the SME Finance Forum that
aims to further advance access to finance for women-owned
businesses by addressing missing data, distributing research, promoting
best practices and providing information on critical issues related to the
women’s market.
The Women, Business and the Law project provides cross-country
similar data for 143 economies on where laws differentiate between
women and men – a factor that can hinder women’s ability to gain
access to finance.
Results:
Through its technical and financing partnerships, the WBG (WORLD
BANK GROUP) has helped developing countries secure expanded
benefits of financial inclusion for women.
For example:
Starting in 2010, the World Bank has helped Indonesia develop its
new Financial Inclusion Strategy, which includes empowering
women as a priority focus. One of the programs that the Bank
supports is financial literacy training for the 4.2 million Indonesian
migrant workers, the majority of whom are women from lower-
income rural families,
IFC’s banking on Women Program plays a catalysing role for IFC
partners and financial institutions to help them profitably and
sustainably serve women-owned businesses. As of December
2013, the program has developed a track record which includes 16
investment projects, ranging from long term loans to instruments
such as risk sharing facilities that help share the risk FIs undertake
when assuming greater exposure in new or riskier markets,
amounting to almost US$700 million in Africa, Latin America and
the Caribbean, East Asia and the Pacific, and East and Central
Europe.
For the first time, policymakers worldwide have a detailed picture of
women’s access to finance, provided by the Global Findex. This
complements data provided by Gender Entrepreneurship Markets
(GEM) program, Women, Business and the Law, Global Financial
Development Report 2014 on Financial Inclusion and Financial
Capability surveys—all World Bank Group-sponsored studies. WBG
experts are working with national policymakers and controllers in more
than 20 countries all over the world to design and implement reforms
that meet the limits identified by these surveys.
Ground-breaking research supported by the World Bank in
Pakistan found that more than two-thirds of women microfinance
borrowers required a male relative’s permission in order to qualify
for any kind of loan. Changes in loan selection procedures and
requirements, urged by this information, could help open up access
for women and enable them to manage their finances in a way that
meets their own priorities.
CONCLUSION:
We found that the gender gap in leadership does make a transformation
when it comes to bank stability. Banks with higher shares of women
board members has higher capital barriers and a lower proportion of
nonperforming loans, and greater resistance to stress.
We found the same relationship between bank stability and the presence
of women on bank controlling boards.
What can explain these findings? There are four possible reasons why a
higher share of women on bank and supervisory boards may contribute
to financial stability:
Women may be better risk managers than men;
Discriminatory hiring practices may mean that the few women who
do make it to the top are better qualified or more experienced than
their male colleagues;
More women on boards contributes to diversity of thought, which
leads to better decisions and;
Institutions that tend to attract and select women in top positions
may be better-managed in the first place.
Based on this evidence in papers and related literature, it has been
observed that higher stability is most likely due to the beneficial effects
of greater diversity of views on boards, as well as discriminatory hiring
practices that lead to hiring qualified or more experienced workers.
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PREPARED BY:
VIBHU UTKARSH ADHIKARI (PRESIDENT)
AYUSH TRIPATHI (VICE PRESIDENT)
ASSISTED BY:
BHAVYA KAPOOR
EDITED BY:
CHETAS PUROHIT