In Box

Womenomics

A brief history of women in the workplace.

With midterm campaigns nearing their climax, President Barack Obama was in Washington state on Thursday to talk to one of his most important constituents these days: women. Amid his West-coast campaign tour for Democrat congressional candidates, Obama took the opportunity to nod to the defining economic narrative of the last 50 years: the entrance of the female half of the population into the workplace.

The White House just released a new policy paper on its economic strategy for women, detailing how it will push for better access to loans, education, and equality in the workplace. "As the majority of college graduates and nearly 50 percent of the workforce, women are in a position to drive our 21st century economy," the paper proclaims.

But this coming of age didn't happen overnight. During World War II, women started working out of necessity; they stayed when jobs became careers. They were hired in a hunt for "diversity" and kept because of their talent. The result has been a world-changing revolution. Today, women are not just good for the bottom line: They're fundamental to bringing nations out of poverty, and they just might be the future of work. Here's how it all began.

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1942: With America's men away at war, women take up civilian jobs at home. Between 1940 and 1950, the proportion of married women ages 45 to 55 in the workforce doubles from 10 to 20 percent. In Britain, about 9 out of 10 single women and 8 of 10 married women are employed.

1954: Future Nobel laureate W. Arthur Lewis argues, "One of the surest ways of increasing the national income" is for women to work outside the home. The Soviet Union takes such advice to heart; by 1970, 9 out of 10 Russian women ages 16 to 54 are either in school or the workplace.

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June 10, 1963: U.S. President John F. Kennedy signs the Equal Pay Act, which attempts to end the gender gap in wages. At the time, an American woman earns about 60 cents for every dollar earned by a man.

1976: Grameen Bank founder Muhammad Yunus begins his first experiments with microcredit, with a focus on teaching disadvantaged Bangladeshi women how to manage small amounts of money.

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1979: With women holding management positions in U.S. companies at just half the rate of men, two women at Hewlett-Packard, Katherine Lawrence and Marianne Schreiber, coin the term "glass ceiling."

1994: Lawrence Summers, then chief economist at the World Bank, finds that educating women and girls is, dollar for dollar, far more efficient at reducing poverty and boosting social indicators than big infrastructure projects.

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May 18, 1998: Newsweek coins the term "womenomics," arguing that the Asian financial crisis has been a blessing in disguise: Japanese women join the labor force in droves, at cheaper salaries than men.

August 13, 1999: Portfolio manager Kathy Matsui authors a report on Japan for Goldman Sachs: "Women-omics: Buy the Female Economy." Over the next seven years, her recommended investments wildly outperform the Japanese market as a whole.

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September 2000: The U.N. General Assembly adopts the Millennium Development Goals, a set of anti-poverty targets for 2015 that officially enshrine the idea that women are instrumental to societal well-being.

April 12, 2006: The Economist turns a concept into a buzzword with "A Guide to Womenomics," noting that women represent a mere 15 percent of directors on U.S. corporate boards and just 7 percent worldwide. The buzzword becomes Womenomics, a book by two journalists, three years later.

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2009: Pundits dub the global financial crisis the "he-cession," as the economic downturn hits men harder than women. Writing in FP, Reihan Salam says, "For years, the world has been witnessing a quiet but monumental shift of power from men to women." A year later in the Atlantic, Hanna Rosin takes the argument a step further, asking: "What if modern, postindustrial society is simply better suited to women?"

September 2010: Worldwide, an estimated 70 percent of women now regularly work outside the home and in many places are the majority of university graduates. These gains are paying off for developing countries' GDPs, but not always for women themselves, who still make about 20 percent less than men in the U.S. and, Sarah Palin aside, lack opportunities in political life. In a whopping 75 percent of parliaments worldwide, less than a quarter of all seats are occupied by women.

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In Box

Reinventing the Wheel

Why no-tech ancient civilizations still can't catch up.

When I worked at the World Bank, management was always checking up on us to make sure our research was relevant for real-world economic development. The standard test question was, "What would your research suggest the finance minister of country X should do?" This question reflected the standard view that has endured since the beginning of development economics six decades ago -- that all countries begin with a blank slate and that development happens when today's government leaders execute wise policies. My job was simply to tell the leaders what those wise policies were.

Imagine the dismay of my managers if my advice to the finance minister had been, "Make sure your country was well caught up on technology -- 500 years ago." But seemingly irrelevant as that advice might be, it's actually true. If a country had the printing press and the magnetic compass in 1500, it's a pretty safe bet it has a strong national economy today. Ancient history still matters for today's development, providing unique insight into why the lights are still off in the dark corners of the world and what we might do to change that.

Strangely, history has never figured into the equation when it comes to exploring why some countries prosper and others don't. To understand how it might relate, Diego Comin at Harvard Business School, Erick Gong at the University of California, Berkeley, and I started by compiling a list of 11 ancient technologies that were around in 1000 B.C.: Was there written language? The wheel? Agriculture and iron tools? We drew today's boundaries on the ancient world and assigned each separate technology history to the future country that would form within that territory. Then we expanded the survey to 1500 A.D., looking for the adoption of 24 technologies, including oceangoing ships, paper, printing, firearms, artillery, the magnetic compass, and steel.

We found that there was a remarkably strong association between countries with the most advanced technology in 1500 and countries with the highest per capita income today. Europe already had steel, printed books, and oceangoing ships then, while large parts of Africa did not yet have writing or the wheel. Britain had all 24 of our sample technologies in 1500. The Democratic Republic of the Congo, Papua New Guinea, and Tonga had none of them. But technology also travels. North America, Australia, and New Zealand had among the world's most backward technology in 1500; today, they are among the wealthiest regions on Earth, reflecting the principle that it's the people who matter, not the places. As migration has transformed parts of the world that were nearly empty in the Middle Ages, technology has migrated with them.

And these differences had already appeared in 1000 B.C.: Late Bronze Age culture in what is now Western Europe already had pack animals, ceramics, and metalwork, while the Central African Neolithic culture did not. In short, the winners keep winning. As Billie Holiday sang, "Them that's got shall get/Them that's not shall lose."

Why is technology so decisive? It's the building block, as our study confirmed, of future innovation -- and that in turn, of course, is the engine of national economic growth. The Romans could not have built aqueducts without prior knowledge of cement masonry. James Watt drew on advances in metallurgy, chemistry, mechanics, and civil engineering -- all of which he had learned in the mining industry -- to make the steam engine. Put the steam engine on rails, and you've got trains. And so on.

OF COURSE, IN SOCIAL SCIENCE, no generalization is universal. The most important counterexample is China, which in 1500 had plow cultivation, printing, paper, books, firearms, the compass, iron, and steel, and yet failed to emulate Europe's Industrial Revolution in the centuries that followed. Scholars have argued that autocratic Chinese emperors killed off technological progress for domestic political reasons. For example, one Ming emperor banned long-distance oceanic exploration for fear of foreign influence threatening his power, after Chinese ships had already reached East Africa in 1422.

This gives us a hint as to how political formation affects development: Fragmented Europe did not have any one autocrat who could kill off technological innovation, and the constant threats of living in a hostile neighborhood spurred the advancement of military technology. And because borders were relatively open around 1500, the reality that citizens could leave for more advanced places -- the forerunner of today's "brain drain" -- kept alive the spirit of innovation.

But does this research imply a fatal determinism, a preordained outcome to the world's race for economic dominance, destined to be lost by countries trying to catch up with the West? Is there inherent racism in the notion that some peoples carry technological innovation with them? No and no. As China's history has shown, when governments stop killing innovation, good things happen. Technological change has also dramatically speeded up, and lower communication and transportation costs make it cheaper and easier to borrow advanced technologies from other countries -- allowing societies to leap forward.

Finland, for instance, was a pastoral society with little cultivation technology and no oceangoing ships in 1500; now it's home to Nokia and some of the world's leading cruise-ship builders. The explosive growth in cell phones in Africa, skipping the intermediate step of land lines, is a promising sign of what Africa's tech future could look like -- if it weren't for its plague of poor governments. In today's globalized and hyperconnected world, the possibilities for jumping around mean that the technology of 1500 can only explain part of the variation of per capita incomes -- the other part of technological progress is still up for grabs.

So what does this tell us about the prognosis for bringing the world's bottom billion up from poverty? For one, it tells us that we've been doing development wrong. The traditional approach to development was as a top-down process led by great men and benevolent autocrats, advised by great experts. Former World Bank chief economist Stanley Fischer used to joke about a new grammatical tense he called the "World Bank imperative form": Country reports were long lists of things that "must be done" by the authorities, ranging from grandiose infrastructure projects to implementing detailed plans to meet health, nutrition, sanitation, and education needs. But our research shows that development is not about what you dictate, but what you discover. Little penicillin did far more to improve the world's lot than big plans conceived around a conference table.

The World Bank imperative approach gave us Africa's stagnation, the failure of economic reforms in the 1980s and 1990s, and the disastrous transition from communism to capitalism in the former Soviet Union. These and many other disappointments over the past half-century do not predict a cheery future for the great-men-cum-great-experts approach.

Most importantly, what the history of technology tells us is that the blank-slate theory is a myth. Top-down development programs simply don't work. In fact, the principal beneficiaries of Western largesse today -- African autocrats and dysfunctional regimes -- are themselves the main obstacles to development. If there's anything that "must be done" to spur future development, it's to create the conditions necessary to empower the ordinary individuals who will create new and unforeseen technologies out of old ones. There's a Thomas Edison born every minute. We just have to help them turn the lights on

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