Noreena Hertz: We need women in the centre

From the economist's Miliband lecture, given at the London School of Economics

A few months ago, the former Dutch Minister of Development, Evelyn Herfkens, asked me something that so disturbed me that I have decided to focus on it in my talk today. What she asked me was this: "Surely it's better that women are exploited than excluded?"

This was in connection with women working in sweatshops in third-world countries. A question very much in line with comments made by economists such as Jeffrey Sachs and Paul Krugman. Surely abusive working conditions are better than no jobs at all? Or, to quote Jeffrey Sachs, writing in The New York Times, "There are too few sweatshops."

What motivates these statements? A belief that low-cost labour is a necessary stepping-stone in the path towards successful development. The success of the Asian tigers between 1960 and 1990, through export-led industrialisation and their use of low-cost labour, is often held up as proof.

Any attempt to explain the East Asian success story up until the 1990s by the tigers' ability to rely on low-cost labour, completely ignores the fact that a major factor in the Asian tigers' spectacular rates of growth was that they benefited from US investment and aid during the Cold War, which is not replicated today. And also that their governments intervened in their economies with protectionist policies that would simply not be allowed in today's free-trade regime.

We have to convince policy makers in developing countries that exploitation does not foster long-term growth. And that rather than being at odds with economic sustainability, a positive relationship between equity and sustainability may often exist.

Countries that focus on low-cost female labour are likely to find themselves locked in at levels of low-productivity development, desperately having to play catch up with countries invested in technology, supportive human resources policies, and women's education.

For reasons of economic sustainability, and even more so for reasons of justice, in economic policy, in political action and in social commitment too, these women on the edge must become women in the centre.