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U.S. Women Owned Businesses Involvement in International Trade as a Critical Step for the Future of the U.S. Economy

January 14, 2019
On August 28th, Ivanka Trump, chief advisor to President Donald Trump, announced the administration’s plans to advance women’s economic empowerment in the “Western hemisphere” after months of explaining the importance of women’s involvement in the workforce and increasing the number of female-business owners.[1] This initiative is in accordance with a global trend of international organizations like the United Nations and World Economic Forum advocating for women’s economic empowerment in both developed and developing countries. A specific focus within this movement is increasing women-owned business involvement in international trade because this presence is good for national growth, societies and ultimately the global economy.[2] These advancements also occur in the United States where women-owned businesses that export provide higher wagers, are 1.2 times more productive, and hire more employees than their male counterparts; meaning that increasing the number of women owned business that export and the number of those exports could at the very least increase middle-class wages and lower unemployment.[3] Yet while the United States maintains its position as one of the best countries for women entrepreneurs, along with Canada and Australia, women-owned businesses still face barriers against entering the export industry.[4]

Image: Opportunities for women drive comptetiveness, Sources: Economist Intelligence Unit's Women...Image: Opportunities for women drive comptetiveness, Sources: Economist Intelligence Unit's Women's Economic Opportunity Index, World Economic Forum's Global Competitiveness Index

In 1979, President Jimmy Carter directed an executive order recognizing the importance of women business enterprises to the national economy and ordered the development of federal policy to support and advance their growth.[5] This order acknowledged “the obstacles facing women entrepreneurs,” their need for stimulation, and the responsibility of the federal government to “facilitate, preserve and strengthen women’s business enterprise and to ensure full participation by women in the free-enterprise system.”[6] This order led to an extensive investigation into the state of affairs for women entrepreneurs that revealed that in addition to astonishing condescension, women applying for new-business loans faced substantially higher standards for net-worth and financial security than their male counterparts. Soon after, a bipartisan bill, H.R. 5050-Women’s Business Ownership Act of 1988, was passed and for the first time women were legally allowed to take out business loans in their own name.[7] Only 30 years ago, the importance of women’s involvement in the U.S. economy was recognized by federal legislation and its drafters for the first time. Since this bold step forward, the number of women-owned business has grown, at a rate which is exponentially faster than businesses on average.[8]

As of 2017, U.S. women-owned businesses accounted for 39% of all U.S. companies and generated over 1.7 trillion in revenues. Between 1997 and 2017 this sector grew 114% compared to the average 44% increase of other firms.[9] But barriers like access to financing, market information, and entry into male-dominated industry networks hinder their ability to move beyond domestic sales.[10] Across industries, women-owned businesses are less likely to export than male-owned business and of the approximately 12 million women-owned businesses in the U.S. only 12% of them export.[11][12] There are numerous private companies, organizations, and associations in the United States like: The Association of Women in International Trade; the Organization of Women in Trade; the National Association of Women Business Owners; National Women’s Business Council; and Women Impacting Public Policy working with state and federal governments to provide women business owners with the tools and networks needed to increase their export capacity. However, despite the recognition of the vitality of women-owned businesses and the surge of international advocacy of women’s economic empowerment, today the United States federal government lacks a focused effort to provide United States women-owned businesses with the support they need to grow internationally.

Image: Growth of U.S. women-owned businesses compared to all firms from 1997-2017, Sourc...Image: Growth of U.S. women-owned businesses compared to all firms from 1997-2017, Source: American University Kogod School of Business

So, what comes next? Have women-owned businesses reached the so called glass-ceiling? Following President Jimmy Carter’s Executive Order, it is the legal responsibility of the federal government and its agencies to assist in the growth and further development of women business enterprises. At this point, growth of women-owned businesses requires their involvement in international trade, and “full participation […] in the free enterprise system,” implies involvement in the global export community. It seems that the extent that women-owned businesses will develop as determined by the efforts of the federal government.

A quick audit of federal engagement with women-owned business advocacy reveals that, within the government, most of the momentum gained around the late 70s to early 90s has dwindled. This loss of momentum has resulted in scant efforts for the further development of women-owned businesses despite knowledge of what they would require to grow. The most recent push at the federal level for the expansion of U.S. female-owned businesses export capabilities was made by former U.S. Trade Representative Michael Froman in 2012.[13] But, those efforts did not gain traction before the administration changed in 2017. The Small Business Administration arguably has made the most efforts at the federal level toward supporting women-owned businesses. In addition to providing loan-guarantees that benefit women-owned businesses, the SBA has an Office of Women’s Business Ownership which was created in response to Carter’s executive order. The Office provides continued support to the women-owned business community through counseling, training and research into a number of topics. SBA also has a Women-Owned Small Business Federal Contracting Program that aims to award 5% of all federal contracting dollars to women-owned small businesses. Despite the work that SBA is doing, the federal government has yet to reach its 5% goal since the start of the program.

Meanwhile, H.R. 5480 - Women’s Entrepreneurship and Economic Empowerment Act of 2018, a bill geared toward advancing women’s economic inclusion in developing countries, was passed in the U.S. House of Representatives on July 17, 2018.[14] The bill proposes a development cooperation policy with the United States Agency for International Development (USAID) that will promote women’s economic empowerment through the increased support of micro, small and medium-sized enterprises owned by women in developing countries.[15] It also goes further to acknowledge that the legal and human rights of women need to be addressed to ensure their inclusion into the economy and society, and proposes extensive data collection by USAID for a comprehensive analysis on the gender disparity.[16] The bill’s aims are not only morally sound, but crucial for global, political and legal opportunity for women. It has the potential to move millions of women out of poverty and into positions of agency within their states, local communities, and homes if the federal government follows its plans for implementation, which would include approximately $1 million in funds.[17] This is also the type of legislation that is critical to the United States position as a global social leader. While H.R. 5480 rightly aims to achieve social advancement and autonomy for women in developing countries through economic opportunity and highlights economic opportunity as a defining influence in women’s access to education, safety, health, and equality; it unfortunately does not include language that includes supporting the advancement of domestic export-ready businesses nor the discussion of their potential inclusion into federal policy. The bill being proposed without a sister document or discussion concerning the promotion of domestic women’s economic empowerment could signify the continued exclusion of U.S. women owned-businesses and women business enterprises in women’s economic empowerment efforts at the federal level.

Aside from regional programming of federal agencies and the services and programs provided by SBA, there is no focused effort at the federal level to promote the growth of domestic women-owned businesses or to increase their trade capacity. Women business enterprises are low hanging fruit that, without directed support, will fall and be left in the wake of their international peers. As India, China and other Eastern countries take up more of the global economic landscape, the United States has the opportunity to remain an economic and social leader if continued and focused support for women owned businesses is incorporated into the strategies of federal agencies.[18] Further, increasing the trade capacity of women-owned businesses would yield more foreign exports per annum, which could help the country and the current administration achieve its goal of having more exports than its competitors.[19] Unfortunately, it seems that women’s economic empowerment domestically gains and loses momentum every decade. We have yet to see if the White House initiative to improve women’s economic empowerment will include domestic women business enterprises, but it is clear that doing so would boost the economy and ensure the United States’ role as a global economic leader and a pinnacle of democracy and opportunity.

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   [6]http://fortune.com/2015/06/30/countries-for-women-entrepreneurs/ http://www.presidency.ucsb.edu/ws/index.php?pid=32362















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