Trump Administration Budget Makes Women’s Economic Empowerment Goals Harder to Reach

By Daniel F. Runde, Erin Nealer|May 25, 2017 on CSIS.org

Sean Gallup/Getty Images

On April 24, Ivanka Trump and World Bank president Jim Kim authored an op-ed in the Financial Times on women’s economic empowerment (WEE). As we wrote in the CSIS report A Collective Action Agenda for Women’s Economic Empowerment, economic empowerment can be measured by participation in the formal labor force, access to formal financial institutions, and involvement in the local and international economy. It is clear that WEE is an area of interest to the Trump administration. Ivanka Trump and Jim Kim’s article highlights the important role that women play in the development of societies and the business case for involving women in the formal economy.

However, an article published the same day in Foreign Policy revealed a budget proposal that would dramatically reduce spending on foreign policy and international development organizations such as the U.S. Agency for International Development (USAID). The United States could do a far better job leading and influencing on these issues with a budget that prioritizes and supports USAID. USAID is in an excellent position to lead on WEE, with its unique mix of regional and sector expertise, as well as its history of successful, long-term partnerships.

This expertise is at risk due to the proposed drastic reduction of U.S. foreign assistance spending and a potentially disastrous merger between the State Department and USAID. The proposed budget would zero out nearly every USAID function except for basic emergency and health spending in developing countries. In addition, the budget would reduce contributions to the basic operations of the World Bank and the other regional development banks. In order for the United States to remain a leader in international development — and a credible driver of women’s economic empowerment — it will need a strong and flexible USAID. It will also need to maintain leadership in the multilateral development banks (MDBs), like President Kim’s World Bank.

The same week her op-ed was published, Ivanka Trump attended the Women20 (W20) conference in Berlin, a summit that focused on labor market, financial, and digital inclusion. W20 representatives presented German chancellor Angela Merkel, president of the G20, with a series of five recommendations. While we won’t go into each one here, suffice to say that the capacity within the U.S. government to carry them out is mainly housed within USAID.

Ivanka Trump is correct in saying that WEE is an opportunity for the United States. A focus on women’s participation in the workforce is a form of soft power for the United States, and it encourages positive engagement with allies and partners abroad. Additionally — and importantly — more women-owned businesses and women participating in formal financial services equates to more women investing in U.S. businesses and purchasing and importing U.S. products.

Certainly, women represent huge untapped potential in emerging markets. Estimates show that if men and women participated equally in the formal economy, as much as $28 trillion could be added to global gross domestic product (GDP). Additionally, women with access to the formal economy are statistically more likely to spend their earnings on their families and their future; this investment increases rates of school retention and literacy, health indicators, and child nutrition. These investments by women can change the short-term well-being of towns and neighborhoods and, in the long term, can decrease the push factors of immigration to the United States or Europe.

The United States can — and should — continue to lead on WEE issues. But it risks the credibility of that leadership with the proposed foreign assistance budget: a lighter approach to U.S. leadership in the MDBs and a potentially ruinous merger of USAID and the State Department. Through these proposed changes, the United States risks USAID’s regional and technical capacities, including its focus on good governance and encouraging economic growth. Instead, the Trump administration should demonstrate leadership by reviewing the proposed foreign assistance budget and contributions to the International Development Association (IDA) and by deputizing one person to take charge of all foreign assistance.

Further recommendations for continued influence on WEE include:

  1. Reorganize foreign assistance spending in ways that strengthen foreign assistance leadership and support USAID. As we have written before, the United States is overdue for a top-to-bottom review of foreign assistance programs, and Ivanka Trump’s focus on women’s economic empowerment issues is one piece of the U.S. soft power strategic puzzle. All soft power, including international WEE work, belongs in the hands of a strengthened USAID leader. Defunding USAID of everything other than health or emergencies will set back work on women’s economic empowerment. USAID’s programs focus on rule of law, improving investment climate, technical training and capacity building, and financial security and growth — all key components to women’s economic empowerment. USAID even has gender-focused projects active in over 80 countries. USAID is uniquely positioned to act on an agenda in support of women worldwide, and the new budget proposal would force the United States to take a major step back from the international development community.
  2. Continue — and expand — USAID partnerships. Public-private partnerships (PPPs) are critical for addressing many challenges in development, including women’s economic empowerment. USAID has a strong history with and capacity for partnership — unique within the U.S. government. USAID’s focus on partnerships generated the Global Development Alliance in 2001, which focuses on creating strong partnerships with high social impact potential. Women’s economic empowerment will require the private sector’s involvement, and USAID’s partnerships will lay the groundwork for PPPs focused on women’s inclusion.
  3. Support and strengthen U.S. commitments to MDBs. For the United States to continue to lead on international issues, the United States needs to keep its commitments and continue to pay basic dues for concessional lending. By doing so, the United States has a larger voice at the table to influence MDB priorities, including women’s economic empowerment. At present, the United States is sending mixed signals. The op-ed by Ivanka Trump and Jim Kim is a good start. MDBs provide deep research, influential advice, and offer private-sector loans — and sometimes grants — for WEE. The IDA18 Replenishment plan endorses a $2.5 billion “private-sector window” with a special focus on fragile and conflict-torn areas. This “window” will support massive private-sector investments and includes a specific focus on WEE activities. The United States should use the leverage of the MDBs to make its investments go even further.

A focus on women’s economic empowerment could be part of a soft power strategy for the United States. Defunding USAID, merging USAID with the State Department, and/or backing away from the MDBs would make this goal harder to reach.

Daniel F. Runde holds the Schreyer Chair in Global Analysis and is director of the Project on Prosperity and Development at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Erin Nealer is a research assistant with the CSIS Project on Prosperity and Development.

Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).

© 2017 by the Center for Strategic and International Studies. All rights reserved.

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