A look at how LGBT inclusion affects economic development

The LGBT community is an increasingly recognizable group in countries all over the world and has faced discrimination and exclusion in their social circles, political representation, and severely disproportionate violence, and continues to be a consistent victim of hate crime as well as police abuse. Numerous studies have already established that LGBT members commonly face exclusion and inequity in education, healthcare, and jobs. All these hinder and handicap these individuals to exercise their rights and capabilities to be an active and contributing member of society.

These repressive and oppressive structures hinder LGBT people from exercising their powers as a part of the economy and hinder a country’s economic output. Since the LGBT community makes up around 1% of the working capital available in a country, any reduction in their ability to produce economic worth directly impacts the overall output of the economy.

When brought to scale, studies show that markers of economic development such as GDP (Gross Product Index) and HDI (Human Development Index) are consistently higher in economies that safeguard and value the rights and identities of LGBT and transgender people. By utilizing the GILRHO (Global Index on Legal Recognition of Homosexual Orientation) and the TRI (Transgender Rights Index), the study accurately measures "inclusivity" by considering multiple factors that constitute "inclusivity." Both these markers together give an idea of the extent to which LGBT and transgender people can exercise their human rights and power by looking at legal and political provisions and legislation, by looking at positive attitudes and cultures, and by looking at the broad range of social, cultural, legal, political, and economic settings in which LGBT people exist.

This article is based on a study by the Williams Institute analyzing the relationship between LGBT inclusion and economic development, with a special emphasis on emerging economies. It looks at data from thirty-nine countries, of which twenty-nine are emerging economies, countries that are going through rapid economic progress and have an increasing amount of capital and investment as identified by the IMF.

A macro-level analysis reveals a definitive positive correlation between GDP and the GILHRO and TRI. It shows that just one additional right in the GILHRO (out of eight rights) results in $1400 in per capita GDP and higher HDI value. The positive correlation with HDI indicates that the increased capacity to exercise one’s rights is both beneficial to the economy as well as overall well-being and other factors that make up the HDI.

The rest of this article would analyze the consequences of these circumstances for LGBT people and their positive relationship with the economy derived from their greater inclusivity.

According to the study, there are four theoretical frameworks through which the nature and characteristics of the relationship between economic development and the inclusion of the LGBT community relate to one another.

The first framework utilizes the argument of maximizing human capital. Economist Gary Becker observed that employers who retain biases and actively discriminate against gender minorities and specific classes of the human capital available consistently end up with lower profits. This phenomenon, when allowed to occur in large-scale economies, has been found to report lower GDPs than its more progressive counterparts.

In addition to this, the prevalence of discriminatory work environments in a country pushes workers from the oppressed class into occupations and jobs that are less productive and have lower incomes. Unemployment is common among LGBTQ communities in these economies.

Education is a key factor in this framework as well. It has widely been found that inequality in women’s education is linked to lower economic growth. This phenomenon is mirrored by the LGBT community, who are very often discriminated against and discouraged from pursuing academic endeavors, which handicaps their scope of future employment and income. Thus, the inclusion of these communities can be seen as a more efficient utilization of available human capital and is likely to be a reason for the evident difference in economic performance.

The second framework theorizes a reverse relationship between development and inclusion. It argues that more economically secure countries and governments are more likely to value human rights, specifically the expansion of human rights to include the entire spectrum of human life. The “post-material values” hypothesis is built on the idea that as economies mature and become more stable, the shift moves away from the survivalist needs of the population to concerns about self-expression, autonomy, and the expansion of individual rights. It is based on the growing difference between political movements and voter expectations in developed economies to make different political choices that emphasize the inclusion of minority classes. This perspective is verified by empirical studies that suggest that greater economic progress will lead to a change in views and attitudes towards the LGBT community that translates into inclusive legislation.

The third framework offers a more dynamic relationship between the two processes. It is termed "strategic modernization." It theorizes that governments might adopt inclusive policies and reforms as part of a development strategy to exhibit modern and progressive cultures. This, coupled with other development efforts, increases the country's attractiveness to the global market of consumers and buyers regardless of their association with the LGBT community. Foreign investors and trading organizations would be more likely to engage in business with these countries due to the culture and underlying ideologies they seem to have. Studies show that there is a positive correlation between tolerance of homosexuality and GDP, similar to the paradigm above. What the framework offers as an explanation for this is that the presence or inclusivity of gender minorities and minority classes does not directly translate to higher economic output, but their very presence indicates a deeper culture of openness and change that could be profitable for new ventures and creative actions.

These frameworks help us better understand the precise and often complex dynamics in which LGBT people interact with the economy and the multivariate relationship with gender minorities in global economies. It helps us understand the unquestionably valuable impact and value the LGBT community has in the economy and how we must encourage more engagement and accessibility of gender minorities in our societies.