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World Bank: Economic Consequences of Discrimination

United States history is rife with racial and sexual discrimination. This history has shown, however, that systematic alienation of particular social groups comes with costly economic consequences.

For example, the 381 days long 1955-1956 Montgomery Bus Boycott, spurred by the arrest of Rosa Parks, reportedly ameliorated 75 percent of the city bus line’s revenue. The damage translated to approximately a loss of $3,500 per day, calculating a total loss of over $1.3 million.

It is no coincidence that as segregation was outlawed, U.S. economic growth accelerated.

Discrimination based on race, gender or sexual orientation in the U.S. business practices are still rampant today. A report from the Center for American Progress revealed the significant costs involved in discriminatory practices—an estimated $64 billion of revenue per year.

On February 24, Ugandan President Yoweri Museveni signed an anti-gay law. The legislation called for a 14-year prison sentence for each initial homosexual act committed and the possibility of life imprisonment for continued homosexual relations.

In response to this discriminatory law, World Bank President Jim Yong Kim has frozen all of the Bank’s loans, totaling $90 million, to Uganda.

Kim has also harnessed the seismic forces of this bold move to address further forms of discrimination worldwide, such as sexism and racial discrimination. He stressed that discrimination in any form is not only destructive in a moral sense, but harbors the growth of economies around the world.

In a recent public statement, Kim used the negative economic impact of he marginalizing women from job opportunities as a key example. In countries with low economic participation from women, a World Bank study revealed income losses of 27 percent in the Middle East and North Africa. The same study showed that raising female employment and entrepreneurship to equal male levels could improve average income by 19 percent in South Asia and 14 percent in Latin America.

Marginalizing people based on gender, race or sexual orientation is destructive to economies. Legislation that aims to alienate potentially some of the most talented and efficient of a country’s or business’s workers is nothing short of self-mutilation on a macro scale. As Kim said, “Eliminating discrimination is not only the right thing to do; it’s also critical to ensure that we have sustained, balanced and inclusive economic growth in all societies — whether in developed or developing nations, the North or the South, America or Africa.”

– Malika Gumpangkum

Sources: The World Bank, HuffPost, Bloomberg, The Washington Post, Robert J. Walker
Photo: Economic Times