Iceland: ultimate women’s destination

According to a newly released report from the World Economic Forum, Iceland is the No. 1 country in the world for gender equality for the fifth year in a row. And that equality is helping propel Iceland and its fellow Nordic nations to new economic heights.

Turns out, the smaller the gender gap, the more economically competitive the nation.

The notion that gender equality drives development (rather than the other way round) has been so widely celebrated in recent years that it begins to seem trite. But as the newly released 2013 Global Gender Gap Index—which measures gender parity in 136 countries—reminds us, gender equity isn’t simply a matter of equal rights. It’s a matter of efficiency. Many countries have closed the gender gap in education, for example, but gender-based barriers to employment minimize their returns on that investment; their highly educated women aren’t working. The highest ranking countries in the index have figured out how to maximize returns on their investment in women and are consequently more economically competitive, have higher incomes, and higher rates of development.

The report notes a strong correlation between Global Gender Gap Index rankings (which measure health, education, labor political and participation) and measures of global competitiveness. The smaller the gender gap, the better off the economy. Perhaps it’s no surprise that less-developed nations like Yemen and Pakistan are near the bottom of the index. What’s more surprising is that relatively economic powerhouses like Turkey and Japan are right there in the basement with them.

Take the Philippines. It ranks No. 5 on the Global Gender Gap Index, higher than any other Asian nation. It’s the only country in Asia that has fully closed the education gender gap, and its labor force boasts growing ranks of women workers, especially professionals and managers. The Philippines is now the fastest growing economy in Asia, having recently edged out China (No. 69 on the index). There are many reasons for this, including macro-economic policy reforms, but the role of a large, educated and diverse work force shouldn’t be discounted; gender parity in Filipino education and labor preceded recent economic growth.

Though not exactly analogous, something similar is playing out in the corporate world. A 2012 report by Credit Suisse found that companies with at least one woman on the board outperformed those without by about 26 percent. A 2012 report by McKinsey & Company found that companies with more diverse boards had higher profit and higher returns on equity than others. It could be that better performing companies are in a better position to give women a chance, but the researchers at Credit Suisse suggest that simply diversifying the leadership pool can generate surprisingly positive results.

What are the highest-ranking countries doing right?

One major factor, which the report notes every year, is that high-ranking countries “have made it possible for parents to combine work and family, resulting in high female employment, more shared participation in child care, more equitable distribution of labor at home [and] better work-life balance for both women and men.”

The lowest ranking country is Yemen, which has only closed about half of its gender gap. Japan fell four places to No. 120, due in part to a widening gap in political participation: The number of women in parliament fell from 11 percent to 8 percent during the past year. And though Japan has made significant investments in education over the years, it has not removed barriers to employment for women, meaning it has yet to cash in on this investment. The report argues that simply closing the gap between male and female employment in Japan would boost GDP by up to 16 percent.

Turkey remains among the lowest ranking countries in Europe. Despite some gains in literacy, educational enrollment and labor force participation, the country still has fewer women professionals, managers, and politicians relative to other European nations.

Meanwhile, in the United States, the notion that women could conceivably someday successfully combine work and family is still constantly under debate. Incidentally, the U.S. dropped one place in the rankings to No. 23—below Burundi, Cuba and Canada.