As the world continues to grapple with the unprecedented global health crisis of COVID-19, the scale of the related global economic crisis is becoming increasingly clear. We are facing the sharpest economic contraction since the Great Depression in the 1930s, according to the United Nations – threatening to roll back decades of progress in the fight against poverty.
At the same time as taking emergency measures to minimize the immediate economic impacts of the pandemic, governments around the world are looking to position themselves for recovery. A new analysis of economic resilience offers a potential clue to which economies may be able to recover faster: LGBT+ inclusion is correlated to the resilience of a country’s economy.
The analysis by Open For Business, a coalition of companies advancing LGBT+ equality, shows a strong positive correlation (0.67) between how resilient an economy is and how accepting it is of LGBT+ people (see the chart below). This is a significant finding: a one-point increase in social acceptance suggests a three-point increase in that economy’s economic resilience index, even when controlling for GDP per capita. Could LGBT+ inclusion be a secret ingredient for economic resilience?
The answer may lie in the world’s cities.
Cities have been at the frontline of the pandemic – and they may hold the key to global economic recovery. The connection between economic resilience and social inclusion is particularly clear in urban areas. There is a growing body of evidence that LGBT+ inclusive cities have stronger “innovation ecosystems”, higher levels of entrepreneurialism, and they are better able to attract talent and provide a high quality of life – making them well placed for economic recovery.
Let’s look at the evidence. First, innovation is a critical component of a city’s competitiveness, which in turn will make it well placed for recovery. Inclusive cities score higher on the 2ThinkNow Innovation Index, which ranks cities according to their potential for innovation. This index has a correlation of 0.62 with scores of social attitudes towards LGBT+ people, strongly suggesting that LGBT+ inclusive cities are more innovative places (see chart below).
Second, cities with greater concentrations of talent and skills are more competitive and resilient, and attracting top talent is a priority for cities. However, cities that are not LGBT+ inclusive are much more likely to suffer “brain drain”: a 2018 study showed that cities in countries with anti-LGBT+ policies or attitudes are much more likely to lose their talent. Examples include Accra, Baku, Kampala, Kuala Lumpar, Lagos, Nairobi and Moscow. In some of these cities, according to a study by the OECD, more than half of all recent graduates are likely to emigrate.
Evidence shows that diversity feeds a “clustering effect” for young talent, according to research by the economist Enrico Moretti: “It’s a type of growth that feeds on itself – the more young workers you have, the more companies are interested in locating in that area and the more young people are going to move there.” LGBT+ inclusion seems to play an important role here as a signaller of openness, diversity and culture.
The economic shocks of the pandemic are of an unpresented magnitude, and the road to recovery will not be easy. However, we can expect that cities that have embraced diversity may reap an “inclusion dividend” as they begin to rebuild their economies. The strength of their innovation ecosystems and an abundance of talent may make them more agile in the face of downturn and better able to exploit new opportunities presented by the disruption.
There is a strong message here for governments who are using the pandemic as a pretext for intensifying discrimination against LGBT+ people. Recent weeks have seen a surge of anti-LGBT+ activity around the world: the expansion of “LGBT-free zones” in Poland, for example, or the anti-trans legislation in Hungary. In Kampala, 20 LGBT+ Ugandans were arrested on the pretext that they had violated laws used to prevent the spread of COVID-19. Political and religious leaders in the US, Ireland, Israel and Iran have publicly blamed the LGBT+ community for the pandemic, and activists report that this has led to a rise in hate crimes.
The connection between resilience and inclusion is widely accepted by policy-makers. The World Bank describes “inclusive communities” as a key dimension of sustainable, resilient cities. The OECD identifies “inclusive society” as a driver of resilience in a city. The IMF contends that an economy is “more fragile and less resilient when it is not inclusive”. A report by UN Habitat finds that inclusion is required for a “successful urban resilience agenda”.
Now is the time to be embracing LGBT+ communities, not stigmatizing them. Creating inclusive societies isn’t just the right thing to do; as the evidence shows, it’s an important part of an economic strategy focused on resilience and recovery.
Jon Miller is the founder of Open For Business
This article was originally published in World Economic Forum
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