By William Pesek
April 27 (Bloomberg) -- We live in a world of daunting economic challenges: debt imbalances, out-of-whack currencies, Chinese overheating, wobbly housing markets, erratic energy prices, terrorism, geopolitical risks, you name it.
Let's add another one to the list: women.
Gender discrimination is often seen as a social issue. Increasingly, though, it's becoming an economic one, even worthy for the Group of Seven nations to discuss it. If you're not convinced, would the annual loss of almost $80 billion of Asian output change your mind?
That estimate comes from the United Nations Economic and Social Commission for Asia and the Pacific, and it could be a conservative one. The group says the Asia-Pacific region is losing as much as $47 billion of output per year from a lack of female participation in labor markets. And as much as $30 billion is lost because of gender gaps in education systems.
This is the wrong time for Asia to be squandering twice the annual output of Luxemburg because of a problem that's so easily solved.
Growth in India, for example, would increase by 1.08 percentage points if its female-labor participation rate were put on par with the U.S., the UN group said in an April 18 report. Doing so would give India extra gross domestic product equivalent to Uruguay's as it struggles to raise millions out of poverty.
``Gender discrimination has always been considered a soft issue, a human-rights issue,'' said Shamika Sirimanne, a senior UN development economist in Bangkok. ``But we are seeing it carries a huge economic cost.''
Admittedly, gender inequality doesn't factor easily into a nation's credit ratings, bond yields or stock valuations. It's not something to which investment-bank economists pay much attention. Yet over time, empowering women would make Asia a far more vibrant place.
Aside from India, the UN report also pointed to Malaysia and Indonesia as economies that would benefit from greater labor participation among women. It noted that female involvement in China is ``already considerably higher'' than much of Asia. Perhaps it's no coincidence that China remains the region's star economic performer.
Yes, things are improving for women globally, and Asia is no exception. Yet there's ample evidence that things are improving much slower in the 2000s than many feminists had hoped.
Politicians need to realize that underutilizing female workforces leads to slower growth and less-skilled labor markets. The same is true of conservative business cultures that limit women's ability to move up into the executive suite.
Take MasterCard Worldwide's latest women's advancement index for Asia. It showed that even as women make strides in labor- force participation and education, they are less confident than a year ago of getting more of the managerial positions that now go to men. The index fell to 72.09 in 2007 from 76.11 in 2006.
The cost of undereducating women is growing as ideas and information become more valuable than manufacturing. It's an idea Lawrence Summers helped put on the U.S. government's radar screen a decade ago while working for U.S. President Bill Clinton.
Then Summers was pressured to resign the presidency of Harvard University last year amid charges of making sexist statements. The dustup occurred at a conference in Cambridge in 2005 when the former U.S. Treasury secretary questioned women's aptitude for science.
The outcry was misplaced because women have few more enthusiastic cheerleaders among economists than Summers. In the late 1990s and in 2000, I traveled with him through sub-Saharan Africa, India and other poverty-plagued economies such as Indonesia and the Philippines. In each place, Summers counseled leaders to invest more in educating girls.
The reason: Returns on educating women typically exceed those on men. The odds are that the more educated a nation's women are, the more emphasis they will put on investing in the education and health of their children. That results in an economic ripple effect from one generation to the next.
Gender issues aren't just holding back developing economies, a point persuasively made in an April 3 Goldman Sachs Group Inc. report. London-based economist Kevin Daly argued that reduced inequality will help rich nations address the twin problems of population aging and shoring up public pension programs.
Closing the Gap
``Closing the gap between male and female employment would have huge implications for the global economy, boosting U.S. GDP by as much as 9 percent, euro-zone GDP by 13 percent and Japanese GDP by 16 percent,'' Daly said. What's more, he said, rising female labor participation would have ``important implications'' for global equity markets.
The good news is that gender balance can be achieved with a minimum amount of effort and cost. All that's needed is political will. The bad news is it's not clear governments realize that.
``Given how fast Asia is growing and how important it is in becoming an engine of growth in the global economy, we need to make more progress on the gender issue,'' Sirimanne said. ``It's a big and growing one.''
(William Pesek is a Bloomberg News columnist. The opinions expressed are his own.)