The World Bank recently conducted a survey spanning 138 countries from 2006 to 2018, revealing that women own less than a fifth of businesses, despite making up half the population. However, the study also found that female-owned businesses empower other women by employing far more women than male-owned firms. In male-owned businesses, only 23% of workers were women, while over half of female-owned firms are led by women.
In India, the situation is particularly challenging, with low female labor participation and entrepreneurship. The total number of women in the workforce has barely changed over the past 30 years. However, women make up about 14% of entrepreneurs and own a significant share of micro, small, and medium enterprises (MSMEs), contributing notably to industrial output and employing a substantial portion of the workforce.
A report suggests that India can achieve 8% growth by having women comprise over half of the new workforce. While Indian women are not underrepresented in entrepreneurship, they operate much smaller firms than men, especially in the informal sector. As a result, women’s contribution to India’s GDP is just 17%, less than half the global average, and India ranks 57th out of 65 countries for women’s entrepreneurship.
Indian female entrepreneurs empowering growth
Gaurav Chiplunkar from the University of Virginia and Pinelopi Goldberg from Yale University conducted a study arguing that promoting female entrepreneurship could significantly boost women’s workforce participation. They found substantial obstacles to women’s employment and higher costs for female entrepreneurs when expanding their businesses by hiring workers.
Their simulations showed that removing barriers would boost female-owned businesses, increase women’s workforce participation, and drive economic gains. Ashwini Deshpande of Ashoka University notes that women still shoulder most household chores, and there are more barriers, including limited access to safe, efficient transportation and childcare, restricting their ability to work within commuting distance. She emphasizes the urgent need to increase women’s participation in regular salaried paid work with job contracts and social security benefits.
A recent Barclays Research report says India can reach 8% GDP growth by ensuring the representation of women in the workforce. Boosting female entrepreneurship could be a way out, but it won’t be easy. Many women face obstacles from families and communities to working at all, and if more women join the workforce without enough jobs, wages could actually drop.
Nonetheless, promoting female entrepreneurship remains crucial for driving economic growth and empowering women.
