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HUM
28,3 Effects of globalization on women
in Pakistan
Muhammad Zakaria and Bashir Ahmad Fida
180 COMSATS Institute of Information Technology, Islamabad, Pakistan

Abstract
Purpose – The purpose of this paper is to analyse empirically the impact of trade openness on
women’s development in Pakistan.
Design/methodology/approach – Using cointegration analysis the paper empirically analyses the
impact of trade openness on women’s development in Pakistan applying annual time-series data for
the period 1981 to 2007.
Findings – The results show a significant positive long-term relationship between trade openness
and women’s development in Pakistan. The results also show significant positive influence of foreign
direct investment and private sector credit on women’s development and significant negative effect of
private investment on women’s development in Pakistan. Significant negative coefficient of error term
in error correction model indicates that convergence holds in the model.
Research limitations/implications – There is need to know the transmission mechanisms or
channel variables through which trade openness and globalization affect women’s development in
Pakistan. This is left as an exercise for future research.
Practical implications – Since openness positively affects women’s development, government may
continue the policy of trade reforms in the country. Further, government should continue to enhance
the role of the private sector and financial deepening to integrate women in the development process in
Pakistan.
Social implications – The paper contributes to the literature on the subject and will initiate debate
on the issue so that further research can be deepened in this area.
Originality/value – This paper is first study on the topic in Pakistan.
Keywords Pakistan, Globalization, Women, Trade openness, Women development, Cointegration
Paper type Research paper

1. Introduction
Although globalization is not a new concept[1], it remains a subject of debate among
researchers for and against it. While proponents of globalization argue that it uplifts
the economic wellbeing of a country, the opponents highlight its adverse impact on
economic and social development, environment, culture, political systems and human
rights in the developing countries specially its negative effects on women development
in these countries. The effects of globalization on women development depends on
various factors, e.g. class, nationality, race, ability, religion, ethnicity, sexuality, age,
education, etc. Proponents of globalization argue that it has increased women’s
development in less developed countries by creating employment opportunities (Joekes,
1995), technological improvement and by increasing purchasing power. A substantial
body of research indicates that export promotion and trade liberalization policies lead
Humanomics
Vol. 28 No. 3, 2012
pp. 180-186 JEL classification – C13, C22, F41
q Emerald Group Publishing Limited
0828-8666
The views expressed in the paper are those of authors and cannot be attributed to their
DOI 10.1108/08288661211258075 organization.
to the expansion of female employment in export-oriented assembly and multinational Effects
manufacturing, including textiles, electronics, pharmaceuticals, and computer of globalization
components. The example of India and China is often given in this regard where
women have started their own businesses and expand their entrepreneurial activities on women
(Cheng, 1999; Ghosh, 2001). Globalization has also brought great freedom to women,
especially those living in traditionally conservative countries like Indonesia, Ireland and
Thailand, where women are able for the first time to be economically independent of men 181
and to have at least some choice in their personal lives. Further, Morocco and Bangladesh
have seen significant reduction in poverty after globalization as women participation in
economic activity has increased. Indeed, countries with more liberal trade policies have
among the highest HDI scores in the world (Mandle, 2001). Ultimately, by bringing women
into the workforce, globalisation has given women a power they lacked in the past – the
power to end the system that breeds poverty, exploitation and oppression.
Skeptics argue that in many parts of the developing world globalization has
deteriorated the women condition as it prevents women from earning an independent
wage and hinders a more equitable distribution of socio-political rights (Orford, 1998).
Since globalization is a laissez-faire concept in which government has limited role to play.
Therefore, government has cut its expenditures on provision of social services like health,
education, waters, etc. which serve poor women and their children (Bergeron, 2001; Rao
and Kelleher, 2005). It has increased infant mortality rates and the rates of death during
childbirth. Since the public sector is a significant employer of women, it is often women
who are most exposed to the burden of governmental efforts to trim the public sector.
After globalization, due to flexible labor force, public sector lay-offs, the expansion of
export processing zones and the emergence of informal sector, women are now under
paid, work in poor conditions and are facing increasing risks (Standing, 1999; Seguino,
2000). Women continue to be disproportionately employed in low-skill and low paying
jobs in comparison to men, who possess a monopoly over professional and management
level jobs. Further, globalization has strengthened some institutional and socio-cultural
barriers for effective utilization of women in their country’s social and economic
development. Critics argue that policies traditionally under the jurisdiction of states have
increasingly come under the influence of the international financial institutions like the
IMF and World Bank, as well as MNCs and point to Latin America, the Middle-East, and
Africa, where little benefit to women has been shown from market liberalization policies
(Cagatay, 2003; Pearson, 2003; Gray et al., 2006).
Empirically, the effect of globalization on men and women varies in different regions
(Fontana et al., 1998; Braunstein, 2006). Recently, using four different indicators of economic
globalization Richards and Gelleny (2007) have shown that economic globalization has
improved the women’s status in the world. Pakistan is becoming a rapidly globalizing
economy and introducer of economic reforms at a wider scale, it is important to investigate
how much share of enhanced income opportunities due to trade liberalization is allocated
to women development in Pakistan. The research work on investigating the empirical
relationship between trade reforms and women development in Pakistan is quite limited.
This paper is an attempt to contribute in this regard and initiates debate on the issue so that
further research can be deepened in this area.
The rest of the paper is organized as follows. Section 2 explains the effects of
globalization on women status in Pakistan. Section 3 provides the analytical framework.
HUM Section 4 discusses construction of variables along with estimation and interpretation
28,3 of the results. Section 5 concludes the paper.

2. Globalization and women status in Pakistan

Globalization has affected women’s development in Pakistan. This has changed the
quality of life and the availability of opportunities to women in different fields of life.
182 After the liberalization process which was initiated in early 1980s, the women’s rights
have gained momentum and have become a national issue and a sign of modernization.
Globalization has increased the labor force participation of women in Pakistan. It has
increased women’s access to markets and encouraged them to start their own business
and promote their entrepreneurial activities. The expansion of women’s private business
has allowed them to establish national and regional business associations to expand
their access to business networks and markets and promote their business interests.
However, on the negative side competitive market forces, political clientelism, and social
polarization have adverse impacts on women’s lives in Pakistan.

3. Analytical framework
This section derives the theoretical model, which will be empirically estimated in
subsequent section. Following the conventional wisdom, the following variables are
identified as possible determinants of women development:

wdit ¼ a0 þ a1 opent þ a2 fdit þ a3 cpt þ a4 pit þ y t

where wdit is woman development index, opent is trade openness, fdit is foreign direct
investment, cpt is credit to private sector, and pit is private investment. Finally, y t is
white noise error term with usual properties, i.e. y t , ð0; s 2 Þ.
Trade openness and foreign direct investment represents globalization factors.
Credit to private sector indicates financial sector deepening and liberalization
(Khan and Qayyum, 2007). Private investment describes the role of private sector in the
economy. Credit to private sector and private investment measure domestic market
liberalization reforms in Pakistan. Theoretically, all these variables are expected to
have positive impact on woman development in Pakistan.

4. Data, estimation and interpretation of results

The study has used annual time-series data for the period 1981-2010 for Pakistan.
Women development index (WDI) is weighted average of literacy rate, life expectancy
rate and activity rate of women[2]. Trade openness is defined as trade (export plus
import) to GDP ratio. Foreign direct investment, private sector credit and private
investment are taken as a ratio to GDP. The data is taken from United Nations
development program (UNDP), International Labor Organization (ILO), International
Financial Statistics (IFS) and various issues of Pakistan Economic Survey.
We examine the long run cointegration relationship between dependent and
independent variables using the multivariate cointegration methodology proposed by
Johansen (1988) and Johansen and Juselius (1990, 1992). Using ADF unit root test it is
found that all variables are stationary at first difference. We have taken optimal lag
length 1 based on both Akaike Information and Schwarz Bayesian Criteria. Table I
reports the results of cointegration test. Based on Trace and Max-Eigen tests one
 Effects
Alternative Critical values
Null hypothesis hypothesis 5% p-valuesb of globalization
ltrace rank tests Eigen values ltrace rank value
on women
H0: r ¼ 0 H1: r ¼ 1 0.7695 87.8014a 76.9728 0.0059
H0: r ¼ 1 H1: r ¼ 2 0.5343 49.6400 54.0790 0.1174
H0: r ¼ 2 H1: r ¼ 3 0.4365 29.7651 35.1928 0.1711 183
H0: r ¼ 3 H1: r ¼ 4 0.3295 14.8475 20.2618 0.2352
H0: r ¼ 4 H1: r ¼ 5 0.1573 4.4519 9.1645 0.3490
lmax rank tests lmax rank value
H0: r ¼ 0 H1: r . 0 0.7695 38.1614a 34.8059 0.0191
H0: r # 1 H1: r . 1 0.5343 19.8750 28.5881 0.4218
H0: r # 2 H1: r . 2 0.4365 14.9176 22.2996 0.3818
H0: r # 3 H1: r . 3 0.3295 10.3957 15.8921 0.2997
H0: r # 4 H1: r . 4 0.1573 4.4519 9.1645 0.349
Normalized cointegrating coefficients:
wdit ¼ 2 54.012 þ 0.191 opent þ 0.061 fdit þ 0.193 cpt 2 0.752 pit Table I.
Cointegration test based
Notes: aRejection of the null hypothesis at the 5 percent significance level; bMacKinnon et al. (1999) on Johansen’s maximum
p-values likelihood method

cointegrating relationship is found among the variables. At the bottom of Table I

normalized cointegrating equation is reported.
The estimated coefficients indicate that most of the variables affect the dependent
variable in theoretically expected directions. The coefficient on trade openness is
significantly positive (0.191), which indicates that as globalization increases in
Pakistan it will bring women development in the country. Similarly, increase in foreign
direct investment (FDI) and financial liberalization measured by credit to private sector
(CP) will also increase women development in Pakistan. However, the coefficient on
private investment (PI) is negative (2 0.752), which indicates that women development
decreases in Pakistan with the increase in private investment in the country. Several
things may account for this. Although private investment produces jobs for women,
investment companies are generally unwilling to invest additional money to upgrade
infrastructure or the skills of its workforce. For example, Pakistan has experienced a
boom in textile manufacturing facilities, but companies have failed to reinvest profits
to upgrade the workforce or update plant equipment. The result is the flattening of
productivity gains and growth opportunities for women in these economic sectors.
Additionally, most of the private companies hire women who work in their homes.
These women are not provided benefits which are available to workers working at
large factories. It also becomes difficult to these unorganized groups and isolated
women to demand social and political changes.
Error correction model (ECM) is applied to determine the short and long run
coefficients of independent variables. The results of estimation of ECM are given in
Table II. The table shows both the short run and the long run elasticities. The results
indicate that error correction term has negative sign and its value lies between 0 and 1,
which shows convergence of the model and implies that about 37 percent adjustment
takes place every year. The results show that the elasticities of trade openness and
foreign direct investment (FDI) are insignificant both in the short and the long run.
HUM
Elasticities
28,3 Independent variables Short run Long run

Trade openness 20.141 20.071

Foreign direct investment 20.006 20.035
Credit to private sector 0.041 0.203 *
184 Private investment 0.201 * 0.789 *
Error correction term 20.371 *
R2 0.601
Adjusted R 2 0.420
DW-test 1.723
Table II. F-statistics 2.514 *
Results error
correction model Notes: Significant at: *5 percent level of significance; dependent variable: WDI

The elasticity of credit to private sector (CP) is significant only in the long run, while
the elasticity of private investment (PI) is significant both in the short and the long run.

5. Conclusion
This study empirically examines the long run relationship between trade openness and
women development in Pakistan using annual time-series data for the period 1981-2010
using Johansen multivariate cointegration technique. The results indicate that there
is a statistically significant long run cointegrating relationship between openness and
women development in Pakistan. In fact, trade is found to be associated with increased
women development in Pakistan as women have opportunities to non-agriculture
employment which has lowered their poverty level and has raised their social status
in the society. The results also show significant positive influence of foreign direct
investment and private sector credit on women development. However, private
investment has a significant negative effect on women development in Pakistan.
The results of ECM show that the elasticities of trade openness and foreign direct
investment are insignificant both in the short and the long run. The elasticity of private
credit is significant only in long run, while the elasticity of private investment is
significant both in the short and the long run.
These results have important policy implications for the policy makers in Pakistan.
Since trade globalization positively affects women development, government may
continue the policy of trade reforms in the country. Further, government should
continue to enhance the role of the private sector and financial deepening to integrate
women in development process in Pakistan. There is need to know the transmission
mechanisms or channel variables through which trade globalization affect women
development in Pakistan. This is left as an exercise for future research.

Notes
1. Globalization refers to the interaction and integration of people, products, cultures and
governments between various nations around the globe; this is fostered by trade,
investment, and information technology.
2. See ILO.
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28,3
About the authors
Dr Muhammad Zakaria is an Assistant Professor at COMSATS Institute of Information
Technology, Islamabad, Pakistan. Dr Muhammad Zakaria is the corresponding author and can
186 be contacted at: mzakaria80@hotmail.com
Dr Bashir Ahmad Fida is an Assistant Professor at COMSATS Institute of Information
Technology, Islamabad, Pakistan.

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