‘Confidence in the Economy Is Driven by the Woman’

Economists trying to map the global economic recovery tend to focus on demography. The key players at the moment, says former Indonesian finance minister Sri Mulyani Indrawati, are women, who may hold the most potential for jump-starting global growth. Indrawati, now managing director of the World Bank, sat down with NEWSWEEK’s Daniel Stone in Washington to talk about the role of women as key drivers of the recovery. Excerpts:

How do you view the role of women in global development?

So much research has been done showing that the woman is the most vulnerable but also the biggest strength leading to economic progress. This crisis alone is going to create an additional 50 [million] to 60 million poor people, which if you combine with the [global] target to reduce poverty by half by 2015, the woman alone is going to be a huge driver for many countries.

Because of their role within families?

Usually when you target [government money] for women, they’re really going to use it for their children. In much of my experience, the males, when they receive government money, buy something that mostly serves their own interests. This is very generally known by many development experts as well as policymakers.

How can you use this research in structuring a global recovery?

The ability to recover from the crisis depends on how much confidence can be established. The confidence is really driven by the woman—whether she can have the confidence that there will be enough earning or income to finance all the domestic spending—but also by the middle-income class, which for many Asian countries has become the growth power for the economy. They are the ones who can drive growth and create consumer confidence.

The United States has staked its future on rebuilding a middle class. How does that strategy translate in countries that don’t have a middle class?

This is exactly the challenge. If you look at the composition of the global economy now, those from developed [versus] developing countries are now almost 50–50. Some of these countries really need to design their policies to create this middle-income group.

How has the success of microcredit affected women?

There’s broad recognition that you really have to put the money where people are going to self-manage. Usually [funders] are going to approach the women in a small city. The role of access to credit, combined with the approach to the gender base, can provide a very powerful impact in terms of economic activity.

We’ve seen ambition in developing countries to be a powerful force—in some cases outpacing the West. What’s driving that?

Many developing countries are enjoying demographic changes. They have a younger demographic composition so they’re not burdened by legacy policy. Now, if you combine this with a good macro policy and ambitious structural policy, those countries are able to move more flexibly and be more agile.

One of the biggest effects of this recession is China’s continued rise. What will the global ripples look like?

I think the implications for the rise of China are huge, in terms of the political landscape, economic balance, de-velopment thinking, and the environment. That needs to be managed and responded to in a more constructive and positive way. Every decision made by them will have a huge impact, both regionally and globally. This kind of recognition has been growing in Asia.

You mentioned that women are vital to the recovery. Who are the other important demographic players?

China, India, Europe, and the United States are all providing quite a lot of very important signals where this recovery is going to be sustained. But there are quite a lot of studies showing that many countries now are investing in the right activity—for example, protecting the social safety net. Within that social safety net, the role of women [in particular] is usually very important.

(Newsweek)

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