A McKinsey Global Institute study found that advancing women’s equality could add $12 trillion to the global economy by 2025. In a best-case scenario, that number could jump to $28 trillion dollars. “This impact is roughly equivalent to the size of the combined Chinese and US economies today,” according to the report. And it could be realized by ensuring greater equality and opportunities for women.
Instead of governments looking for direct investments and tax cuts to grow their economy, they should focus more on policies to advance women’s participation. Why? Because women are often at a disadvantage.
Inequalities Are Prevalent in Business
When comparing men and women in the business world, a number of inequalities come to light. For example, according to the World Economic Forum in 2019, for every dollar a man gets paid, a woman, on average, only gets paid 54 cents.
Inequality also exists in the venture capital space. In an experiment by researchers from Harvard, MIT, and the Wharton School in which the same idea was pitched to investors and only the voice of the presenter was changed, more than two-thirds of investors preferred to invest in the male voice’s pitch.
This statistic stands in stark contrast to research that showed female-founded and co-founded startups tend to perform better than all-male ones. From my perspective, this shows that women are severely underestimated by investors, though they have proven to achieve better results. For example, in Europe, female entrepreneurship stands at only 30% and the Global Gender Gap Report 2020 by the World Economic Forum says that it will take nearly 95 years to close the worldwide gender gap.
Why Gender Inequality is Critical for Economic Growth
Women have great untapped potential. Research by the Harvard Business Review found that women outscore men in most leadership skills. Women scored higher than men in key skills such as team working, innovation, and problem-solving. Such research bears testament to the immense potential of women when given a more level playing field, such as mentoring, capacity building, and access to credit, as well as their inherent leadership skills critical to success in entrepreneurship.
Furthermore, the 2018 Global Wealth Report by Credit Suisse says that women hold 40% of the global wealth and that women have been increasing their percentage of wealth steadily in the 20th century. If more women had equal access to entrepreneurship opportunities and, in turn, were able to start accumulating wealth, the gender wealth gap could begin to reduce further.
More Women-Tailored Businesses Can Help Fill the Gap
As previously mentioned, when it comes to venture capital funding, significant inequalities still exist. In 2017, all-men teams attracted nearly 80% of capital, while companies founded by all women received only 2% of funding. This shows that companies founded by women hardly get the investment they deserve.
As a result, there could be a lack of businesses that accurately target the needs of women. Women have firsthand insight into the issues other women face, and in developing innovative solutions to address these issues, women can help solve the problems faced by half the world’s population and create entirely new industries.
Entrepreneurship Works for Women
Women also traditionally have greater family responsibilities and make up a higher percentage of single parents, so working in a corporate organization can be challenging, given their other commitments. While corporations need to address their workplace policies to be more flexible to women in such situations, founding their own businesses might be another solution, as there could be more room to tailor their work and demands according to their many commitments.
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