By Maria S. Floro

October 15, 2001

In Preparation for the

2002 United Nations Conference on Financing for Development (FfD)

* The views expressed in this paper are those of the author and do not necessarily represent the views of UNIFEM, the United Nations or any of its affiliated organizations. The author is Associate Professor of Economics at American University, Washington DC. She would like to acknowledge the support of Noeleen Heyzer, the able assistance of Shawna Wakefield and the helpful comments and suggestions of UNIFEM staff. 

For more information, please refer to “The Gender Dimensions of the Financing for Development Agenda,” by Maria Floro for UNIFEM in preparation for the 2002 UN Conference on FfD. The paper can be found at http://www.undp.org.unifem

Gender Audit of the Facilitator’s Draft Outcome Document

of the International Conference on Financing for Development

The Facilitator’s Draft Outcome document for the UN International Conference on Financing for Development (ICFfD) serves as an important base for future discussions and debates on the final agenda for the conference. The document attempts to bring together the main areas of convergence in the FfD dialogue thus far, taking into account the key development goals agreed at major UN conferences and World Summit meetings. With respect to women’s empowerment and gender equality goals, the Facilitator notably acknowledges the importance of meeting these internationally agreed commitments particularly in the promotion of:

·         Gender-sensitive, sustainable investments in education, health, nutrition, and social security programs,

·         Capacity building in gender budget analysis, and

·         Mainstreaming of gender into economic and development policies by multilateral financial and development institutions.

The paper also gives emphasis, in a number of places, to the importance of the social content and social impact of the means for financing development, particularly in matters of equity and distribution.

Nonetheless, the discussion of the six areas covered in the FfD agenda could benefit from greater inclusion of the critical gender dimensions of economic, financial and development policies and processes. Gender asymmetries and biases embedded in market operations, institutions and economic processes will remain unaddressed, and even reinforced by development strategies unless they are systematically and holistically addressed.

The purpose of this gender audit is to provide governments, multilateral organizations and NGOs with a broader understanding of the gender dimensions of the issues addressed in the Facilitator’s paper and with recommendations on how such considerations can be incorporated into the intergovernmental dialogue and final outcomes of the ICFfD process.

I.                    Towards a Fully Inclusive and Equitable Globalization

The introductory section of the facilitator’s draft provides the overarching developmental goal of the forthcoming conference which is “to ensure that the global systems of finance and trade fully support economic growth and social justice for all peoples of the world” (para. 1). It sets the tone for a meaningful and relevant discussion on the six themes in support of  “a sustainable, gender-sensitive, people-centered development” (para. 3). The section also highlights the important and urgent challenge faced by governments and international bodies in terms of reversing “the increasing polarization between the haves and have-nots” (para. 2). It is also commendable that the Facilitator makes it clear that the recommended actions be guided by the following principles of economic and social governance: “equity, solidarity, co-responsibility, foresight, participation, ownership, and partnership” (para 4) under the leadership of the United Nations. These principles are important guidelines for any agreements and commitments reached in the FfD conference, and should be applied consistently throughout the document.

In order to ensure that these principles are upheld, they will also need to take into account those social and distributional consequences of economic actions and policies, particularly as they affect the totality of women’s work, roles and well-being - through their participation in the market economy and the unpaid, non-market sector including household tasks, care for the sick, children and elderly, water and fuel gathering and subsistence production. It is therefore essential that the introductory premises recognize the following:

·         That economic decisions of governments and international bodies influence not only the mobilization of resources but also the distribution of access to and control over these resources and their use allocation.  Increasing numbers of studies have shown that the majority of those who are disenfranchised, marginalized and impoverished are women and children. Any domestic policies and international efforts towards financing development, if they are to abide by the principles of equity, solidarity and ownership, must acknowledge the need to redress or transform those economic actions that sustain or widen gender-based disparities in the access to and control over resources and contribute to the systemic denial of entitlements to vulnerable groups, including poor women and children.

·         The need to adequately redress the imbalances in the distribution of social and economic benefits and costs resulting from agreed domestic policies and international efforts. The invisibility of increased unpaid, non-market work burden, deterioration in health, and decline in women’s capabilities are likely to give false impression of the effectiveness of policy and development strategies. Yet these “hidden” costs, unless acknowledged and systematically addressed, can seriously hinder the agency of women as a dynamic force in development.

·         The need to ensure that women and their concerns are duly represented in the norm-setting and economic decision-making “participation by all members of the international community” (para 4).

In this regard, it is imperative for governments and international bodies to give due recognition to the importance of gender equality and women’s empowerment in addressing each of the themes in the FfD conference agenda. Only by holistically and collectively addressing the gender concerns regarding the different financing strategies can the agreements and commitments reached at the forthcoming FfD conference truly promote a “sustainable, gender-sensitive, people-centered development” that benefits all - women, men and children.  

II.           CONFRONTING THE CHALLENGES OF FINANCING FOR DEVELOPMENT:

              LEADING ACTIONS

Mobilizing domestic financial resources for development.

Overview

The gender dimensions of the issues and the recommended actions related to mobilizing resources for development are addressed more clearly and explicitly by the Facilitator in the context of domestic resource mobilization than in the discussion of the other five themes. This section of the draft paper appropriately recognizes the importance of developing an enabling environment for financial sector growth that empowers women, promotes equitable income distribution and protects workers’ rights and the environment (para.8).  It also addresses the need for a more gender-sensitive allocation of investments in education, health, nutrition and social security programs.  Moreover, it gives priority to microcredit and credit for small and medium enterprises, although it has yet to stress the need for gender-awareness. Finally, the section emphasizes the need to strengthen technical assistance for gender-budget analysis, among other areas of concern.

Issues

Despite these gender sensitive considerations, the document does not acknowledge the inherent gender biases found in the policy and regulatory frameworks of financial institutions. The severe disadvantages faced by women in terms of access to credit, insurance and savings facilities reduce the effectiveness of domestic resource mobilization. The document commendably supports capacity building for gender budget analysis, yet it does not address revenue generation and the gender dimensions of taxation policies, which can disproportionately burden women.

Recommendations

In developing an enabling environment for dynamic financial sector growth that serves the countries’ economic and social development goals, governments should also consider:

·         Adopting a gender-aware policy and regulatory framework that addresses the distinct needs and concerns of women and men for insurance, savings and credit services and that addresses the inherent biases of many financial institutions in serving the poor and in particular, women.

·         Establishing a ‘gender desk’ with administrative and budgetary powers within the finance ministry to ensure that the above gender concerns are addressed at the formulation, implementation and evaluation stages of policymaking.

·         Adopting a gender-sensitive analysis of budgets and taxation policies, which promote transparency and equity and their incidence should not disproportionately burden women.

Mobilizing international private resources for development.

Overview

The Facilitator’s draft discussion of the issues and challenges of mobilizing international private resources emphasizes the significant, potential benefits of foreign direct investment in promoting sustainable development (para.11) and suggests ways of promoting its flows and other forms of capital to developing countries (paras. 12-15,17). This involves, among others, improving the investment climate in these countries and ensuring a stable international financial system.  This section, in line with the guiding principles of social and economic governance urges the business sector to consider “the social and environmental implications of their enterprises and encourage civil society organizations to help ensure adequate attention to these aspects” (para. 16).

Issues

It is easy to highlight the potential benefits of foreign direct investment since they are measurable, especially in terms of increased foreign exchange and investment capital.  But the potential, significant costs resulting from shifts in budget allocation, decline in public sector investment in social services, and higher market volatility are in “less visible” and unmeasured forms, such as increased unpaid work burden of women and other social and environmental costs. For example, the reallocation of budget priorities towards infrastructure that would primarily benefit investors may constrain resources available to other budget expenditures such as education, health, sanitation and other social services. Also, the use of tax-based incentives, cheap labor and feeble environmental and labor standards to attract foreign capital leads to an inequitable distribution of benefits and costs.

Therefore, the terms under which private foreign capital flows enter the country are critical in determining whether investment promotes or undermines women’s empowerment and sustainable development goals, including gender equality. In enhancing the financial flows to developing countries and economies in transition, government actions and policies need to ensure that their strategies and efforts do not contradict the principles of equity, foresight, and participation. Yet the draft neglects to address serious inconsistencies and gendered implications of the types of policies, corporate governance and regulatory frameworks that governments tend to use in attracting foreign capital. The draft also falls short in providing specific recommendations that would enable the flows of international private resources to serve the goal of “sustainable, gender-sensitive, people-centered development”.

Recommendations

            Governments could consider:

·         Establishing public participation forums, monitoring mechanisms and instruments that can help assess the quality of engagement of foreign capital in support of gender equality and women’s empowerment goals.

·         Undertaking efforts to develop gender-aware “regulatory frameworks” and “measures in source and destination countries” (para.17) to mitigate excessive market volatility.

·         Providing mechanisms in allocating revenues towards the provision of social protection and safety nets to those who are displaced and adversely affected by capital flows, particularly women and children in poor households.

·         Establishing gender-sensitive guiding rules and policies in employment practices of foreign investors, including global corporations by building on existing agreed multilateral instruments such as the ILO Tripartite Declaration of Principles.

·         Creating a ‘gender desk’ in the finance ministry and gender-sensitive investment policies to ensure that gender equality is promoted and ensured in the formulation and implementation of such policies.

International trade as an engine of growth and development

Overview

This section emphasizes the importance of trade liberalization and of ensuring an “open, equitable, rule-based, predictable, and non-discriminatory multilateral trading system” that supports development goals (paras.18-20). It also raises the need to properly address labor and environmental standards, but has relegated such issues as separate from and ‘outside’ trade negotiations and policy discussions (para.19).

Issues

The discussion of trade in the draft raises serious concerns from the perspective of gender equality and women’s empowerment, particularly in terms of the strong push for trade liberalization without any adequate regard for the different effects on women and men in terms of earnings, employment and level of unpaid work. Trade policy - whether to promote exports or liberalize imports – must take into account these significant gender dimensions if it is to “fully support economic growth and social justice for all peoples” (para.1). Unless gender concerns and labor issues are incorporated into these decision-making processes, trade policies and multilateral trade agreements can yield serious, adverse development impacts particularly with respect to women’s empowerment and welfare.

It is also important to examine carefully the consistency of the paper’s call for improvement in “competitiveness and export diversification” (para.23) with the stated guiding principles in the introductory section of the draft” (para.4). Unless gender is taken explicitly into account, global competition and export promotion can easily occur as a ‘race-to the bottom’ that is dependent on the gender wage gap and gender bias that marginalize or steer women into low-paying and/or dead-end jobs in free trade zones and export-oriented sectors.

Similarly, unregulated import liberalization can threaten the livelihoods of women and other disadvantaged groups working in formerly protected areas of the domestic economy. Without appropriate safety nets and without short-term and long-term plans for resource provision, social infrastructure and state support for stable employment creation, the displaced workers may remain ill equipped to upgrade their productive activities in the face of increased global competition. Unfortunately, the scale of the adverse displacement effects of trade liberalization, unlike its positive employment effects, are not well monitored and evaluated, so their precise scale is yet to be known.

Without a gender-aware monitoring and evaluation of the social and economic effects of export expansion and import liberalization, trade can undermine the attainment of a “sustainable, gender-sensitive, people-centered development” (para.3).

Recommendations

Governments could consider:

Ø      Conducting broad public debates and hearings to ensure that the concerns of women are heard and taken into account.

Ø      Mainstreaming gender in the formulation, implementation and evaluation of trade agreements, treaties and initiatives, including the New African Initiative, to promote sustainable economic growth and gender equality. This would involve taking the following steps:

·         Establishing a ‘gender desk’ with administrative power within the trade ministry and other monitoring bodies to ensure that gender concerns are addressed at the formulation and implementation stages of policymaking; and

·         Implementing a gender analysis of bilateral, regional and international trade negotiations and treaties including FTAA, Cotonou, TRIPs, TRIMs, GATs and ongoing WTO negotiations in order to identify potential opportunities and threats to the well-being of women and other disadvantaged groups in subsistence agriculture, displaced sectors and the informal sector.

Increasing international financial cooperation for development

Revitalizing ODA

Overview

This section raises the importance and “urgency of increasing international development assistance” and the need to “focus on intermediate targets identified in the context of the implementation of the Millennium Goals” (para.27). It also calls for the enhancement of “the effectiveness of aid in support of [recipient countries’] nationally owned development strategies” (para.28). It calls on the multilateral and bilateral financial and development institutions to “give primacy, in their assistance, to development strategies and programs that are developed and owned by recipient countries” (para.29).

Issues

The discussion on development cooperation in the draft paper nonetheless fails to provide concrete recommendations and mechanisms so that development cooperation is able to directly benefit people living in poverty, particularly women and children, as pointed out in the UN Secretary General’s Report. Unless gender considerations are fully integrated into the operational frameworks for development cooperation, aid distribution, management and evaluation can compromise social development goals upon which development cooperation is based. Furthermore, the special needs and priorities of women can continue to be overlooked in the allocation of aid. This is particularly the case for war-affected women who suffer disproportionately from the heightened emphasis on mobilization for war. Aid projects can also disadvantage women because these initiatives - even if they are developed and owned by recipient countries - can have a “male breadwinner bias”, overlooking the economic and care activities of women.

Recommendations

      Donor and recipient countries, respectively could consider: 

·         Implementing a gender-inclusive framework and Code of Conduct such as that formulated by the recent Sector Wide Approaches (SWAPs) Task Force and the DAC Guidelines for Gender Equality and Women’s Empowerment. 

·         Establishing criteria to overcome the disparities in resource mobilization for the special needs of women, particularly war-affected women.

·         Making the terms of ODA and their use transparent and accountable to all people. Key institutional arrangements and regulatory structures should include representatives reflecting women’s concerns and gender consideration.

Enhancing financing for global public goods

Overview

            The discussion of public goods in the Facilitator’s paper draft recognizes the need for additional financing and for strengthened public-private cooperation for the provision of global public goods (GPGs) (paras.31-33). This is a positive move towards an important area of global concern.

Recommendation:

Governments could also consider:

·        Including poverty eradication and gender equality as GPGs, which should be collectively provided. They make important contributions toward sustainable development – the benefits of which accrue to everyone in the world. In that sense, they have strong elements of indivisibility and non-exclusiveness of benefits. These goals must therefore be emphasized not only in national economic policies and development plans but also in international efforts to finance and coordinate the provisioning of global public goods.

 

Innovative sources of multilateral development financing

Overview

            The discussion in the Facilitator’s draft also recognizes the need to “explore innovative sources of multilateral finance to support official development assistance, humanitarian aid and global public goods” (para.35). In this context, it calls for the examination of the desirability and feasibility of carbon taxes, currency transaction tax (CTT), and other innovative sources which are positive steps towards redressing imbalances in the distribution of costs and developing new sources of multilateral finance.

Recommendation

Governments and international bodies could also consider:

·         Establishing global fund schemes for gender equality and poverty eradication. This would help ensure that social priorities are addressed first in the allocation of such funds and that those who are disenfranchised and disempowered benefit from these innovative financing schemes.

Sustainable debt financing

Overview

            The discussion of sustainable debt financing in the draft paper recognizes that excessive debt burden has caused the channeling of scarce financial resources towards debt servicing and away from necessary social and physical infrastructure development.  It has called on the industrialized countries, as well as the IMF and World Bank, to provide additional resources and “more effort… to reduce debt in the HIPC countries to sustainable levels” (para. 40) and to “provide policy actions for prompt, comprehensive debt relief to low income countries, small island developing economies (SIDs), and landlocked developing countries in the face of natural catastrophes and severe terms of and severe capital shocks” (para. 41). The paper also urged the Bretton Woods Institutions to further enhance the HIPC II framework in order to provide faster and broader debt relief.   These recommended actions are important in addressing the grave problem of mounting debt burden and debt servicing that has created obstacles to development.

Issues

            The success of such recommended actions in improving the well being of all people requires, however, the development of a more comprehensive, gender-aware approach to debt relief initiatives and to sustainable debt financing options. Without gender analysis, there is little chance that any efforts to reduce or manage external debt will bring about poverty eradication for both women and men.  Moreover, these initiatives and policy actions should not be premised on compliance with economic policies and programs that reinforce gender inequities and lead to violation of civil, social and economic rights, particularly those of women. Governments have a critical role in ensuring that loans are borrowed on terms that do not compromise the goals of “sustainable economic growth and social justice” (para. 1). Debt relief initiatives and debt financing measures will work only if there is democratic discussion and participation by civil society in loan negotiations and agreements.

 

Recommendations

It is important therefore that governments and international bodies consider the following:

·         Eliminating conditionalities in debt relief initiatives and sustainable debt financing measures that increase or maintain gender inequalities and that lead to disproportionate burden of adjustment on women;

·         Earmarking resources released by debt relief to address specific targets and benchmarks agreed upon in the Beijing Conference and the Millennium Declaration. Positive provisions for women's sustainable livelihoods and safety nets could be made, and the reduction of gender inequality in access to education, credit, employment and living wages could be included as targets in debt reduction and in poverty alleviation commitments.

·         Including in debt sustainability assessments and reviews the social costs borne by the poor and women - such as unpaid work burden, decrease in schooling, deterioration of health, rise in the trafficking of women, and domestic violence.

·         Including representatives that reflect women's concerns and gender considerations in key policy discussions and institutional structures that may emerge from discussions of external debt.

Addressing systemic issues

            The discussion of systemic issues in the draft correctly points out the “urgent need to enhance the coherence and consistency of international monetary, financial and trading systems in support of development (emphasis is mine)” (para.42). To this end, the draft emphasizes “the importance of reforming the international financial structure, improving global governance and strengthening the UN leadership role.”  These points provide a meaningful basis for the discussion of the subject.

Reforming the international financial architecture

Overview

The draft paper argues that the current reforms of the international financial architecture fall short of “the changes that are needed to ensure adequate support of development and the protection of the most vulnerable countries and social groups from the effects of the crises (emphasis is mine)” (para.43). This point serves as an important reminder of the primary goal of any reform or measure on systemic issues. The paper also calls for the IMF to continue to give “high priority to preventing crises and strengthening the underpinnings of international financial stability” (para.45) and for multilateral financial institutions to provide policy advice, support adjustment programs and requirement of the implementation of multilaterally agreed codes and standards (para.46).

Issues

It is in the spirit of “enhancing coherence and consistency in international monetary, financial and trading systems” (para. 42) that governments and international bodies also need to call on multilateral financial institutions to include the surveillance of major industrial countries in its reform, since their financial policies and the instability of their currencies act as catalyst for crises elsewhere in the world economy. The facilitator’s paper however, does not address these issues. The paper also neglects to consider the relevance of a gender-sensitive review of multilateral financial institutions’ policy conditions attached to its loans, so that they do not undermine the development goals and guiding principles.

There is emerging consensus on the increasing importance of regulation and capital controls in crisis prevention and crisis management. But regulation requires that national governments, civil society as well as international organizations must develop their ability to monitor the movements of capital across national boundaries.

The emphasis given in the paper on fair-burden-sharing as well as moral hazard prevention is a concrete move towards addressing the issues of equity and social justice. It is important to also consider that the terms of agreements in trade and foreign direct investment along with the conditionalities for loans and aid, as well as the clauses in crises resolution adjustments, have significant distributive consequences within countries as well as between countries and can also create a systemic imbalance in resource distribution. In many instances, the disproportionate burden of adjustment falls hard on the poor and women with increased unpaid work burden and compromised level of human subsistence.

Recommendations

Governments and international bodies could consider:

·         Calling on multilateral financial institutions to formulate consistent and transparent rules, including surveillance of major industrial countries given the wide impact of their financial policies and currency stability on the rest of the world economy.

·         Earmarking financial resources to meet multilaterally agreed development targets and benchmarks in the World Summit for Social Development and the Beijing Conference in crisis prevention.

·         Developing a comprehensive, gender-aware framework that enhances the social development impact of financial flows to be part of any international financial stability planning.

Improving global governance

Overview

The draft places emphasis on the importance and urgency of global economic governance, and upholds the guiding principles of co-responsibility, participation, ownership and partnership (para 1).  It calls for “increased consultation with civil society and the business sector” and increased “representation and participation of all developing countries in economic decision-making and norm-setting bodies in order to make them more participatory” (para. 50).  It also points to the need of strengthening the leadership role of the UN in these endeavors (paras. 49,51). These recommended actions underline the importance of upholding the guiding principles of the FfD conference particularly as the need for stronger, broad-based global governance have become more urgent than ever.

Issues

There are clear organizational gaps in global governance raised by the draft in this section that understandably need to be addressed. One shortcoming is the need “to strengthen the coordination of multilateral financial and development institutions (in order) to more decisively mainstream gender into economic and development policies” (para.54). This is a positive step in ensuring that gender equality and women’s empowerment goals are addressed in global decision-making processes. The draft also suggests exploring a global network of tax authorities such as an International Tax Organization or some tax cooperation forum which can serve as an important vehicle for redressing the systemic imbalance in resource distribution and in the global redistribution of benefits and costs of globalization (para. 54). Such an institution can help develop a system of transfers from the richest to the poorest regions of the world in a cohesive and socially effective manner.

  Although there are concrete steps recommended by the draft towards more participatory decision-making on global issues, there is still need for specific measures that would ensure more active and in-depth participation by developing countries’ citizens, particularly those from the most vulnerable countries and social groups, including the poor and women. Their voice and representation in global governance structures and institutions including IMF, WB, WTO, Bank for International Settlements, Basel Committees and the Financial Stability Forum as well as in the proposed International Tax Organization are critical in ensuring that vulnerable groups have an important role to play in economic decision-making and norm-setting. This would help address a major shortcoming of past and current global economic decision-making in which least developed countries’ and women’s concerns are often kept on the margins of discussions. Increased participation will boost the effectiveness of the operations of such institutions and bodies and promote a sense of “ownership” for all.

Recommendations

To help strengthen broad-based participatory decision-making and help fill organizational gaps, governments and international bodies could consider:

Ø      Involving civil society, including women’s organizations, in policy formulation, rules setting, and adjustment programs. For example, the voice of men and women in developing countries need to be fully represented in the Financial Stability Forum, WTO, IMF, WB, Bank for International Settlements and Basel Committees as well as in proposed international bodies such as an International Tax Organization.

Ø      Taking concrete steps towards the development and implementation of a comprehensive gender-aware framework for:

·         the development of international standards , codes, transparency and regulation,

·         decision-making on trade, fiscal  and financial policies,  and

·         creation of more balanced monitoring of capital flows, aid use and management, and debt financing.

Ø      Ensuring that funds originating from proposed international bodies such as the International Tax Organization, which can provide a system of mandatory, redistributive transfers -- including the currency transaction tax (CTT), global carbon tax and the unitary global tax --, are allocated through the global fund schemes for meeting social priorities, including women’s empowerment, gender equality, environmental protection and poverty eradication.

Strengthening the UN role

Overview

The draft emphasizes the importance of reinvigorating the United Nations, particularly the General Assembly as the chief policy-making and representative organ of the UN, and of strengthening the Economic and Social Council to help fulfill its role as described in the UN Charter (paras. 55,56). It also addresses the need for greater policy coherence and better cooperation among the international bodies including in its provision of global public goods (para. 57).  In this regard, the draft requests the Secretary-General to encourage public discussions on the proposal to have a world economic body at the highest political level under the aegis of the UN (para. 58) and to establish a Group of Eminent Persons with the mandate to propose options and recommendations (para. 59).

Issues

            These proposals are positive moves toward addressing decisively some major  shortcomings in the global economic governance – strong leadership and a responsible body for coordination and cooperation. Nonetheless, it is important that the international bodies do not overlook the critical need for the voice and representation of women and other vulnerable groups from developing countries to be heard and involved in the creation of a world economic body at the highest political level, and in the proposed Group of Eminent Persons within the United Nations. This step is critical in ensuring that gender issues and concerns of the poor have an important role to play in economic decision setting and norm setting.

Recommendations

Governments and international bodies could consider:

·         Involving civil society, including women’s organizations, in the formulation of a world economic body under the aegis of the UN and in the proposed Group of Eminent Persons within the UN.

·         Taking concrete steps towards the development and implementation of a comprehensive gender-aware framework for international cooperation including in the provision of global public goods and in the consolidation of a stable and strong international financial system. This would help ensure that such steps would be fully responsive to the requirements of a “sustainable, gender-sensitive, people-centered development”.