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Rainbows and Economics

“There is a part of homophobia that is often overlooked: it can deeply affect the homophobic as well.”

Whether it is the movement towards marriage equality in Taiwan or ‘aggravated homosexuality’ being punished in Uganda or the brutal treatment of gay men in Chechnya, our society has seen both progress as well as reversals when it comes to LGBTQIA+ rights. Homophobia, a term coined in 1960s, is a culturally conditioned response to homosexuality that manifests itself in legal restrictions or even violence (sometimes called ‘gay bashing’). A plethora of moral arguments already exist in favor of reforming and repealing such restrictive laws. However, can countries have any other incentive to decriminalize homosexuality? Can governments put themselves at a significant advantage just by being accepting?

Fabrice Houdart, president of World Bank GLOBE, an LGBTQIA+ resource group for employees at the organization, called discrimination a “significant, self-inflicted economic wound.” [1] In simple terms, if LGBTQIA+ people are discriminated against in employment and education, their ability to contribute to the economy lessens. In addition, the stigma and violence against these people damage their health which further diminishes their economic contributions. And if a part of the community is not able to freely participate in the economy, it will have an adverse effect on others who are also a part of that economy. As a whole, it is not hard to see how homophobia can be bad for any country. The existence of anti-LGBTQIA+ laws, that enforce such homophobia, impedes the prosperity of nations. [2]

On the flipside, if homophobia adversely affects an economy, then by similar reason, countries that are more accepting will have stronger economies. A country’s average gross domestic product (GDP) should be higher where acceptance of LGBTQIA+ people is higher. How much? In the US, for example, a change in opinions caused the GDP per capita to grow by $1500 from 1990s to this decade. [3] The underlying logic remains that inclusion helps LGBTQIA+ people to offer more than they could previously contribute because of better health, better education and better employment.

According to Dr. M. V. Lee Badgett, an economics professor at the University of Massachusetts, Amherst, the economic cost of homophobia ranges between 0.1 percent to 1.7 percent of a country’s GDP. Her findings are reported in The Economic Cost of Stigma and the Exclusion of LGBT People: A Case Study. [4] Measuring the cost of homophobia in India, an economy of 2.6 trillion USD, means discrimination is costing nearly $182 billion dollars, which is about half the entire budget of the country.

There is also an abundance of adverse economic effects stemming from a culture of intolerance, exclusion and discrimination, from access to global markets to national reputation, public health and corruption. Studies conclusively link the mistreatment of the LGBTQIA+ community to the loss of tourism, LGBTQIA+ brain drain and diminished inward foreign aid and investment.

For instance, the LGBTQIA+ travel sector is witnessing a significant growth in the present scenario. However, more than half of the LGBTQIA+ community would be unlikely to go to a destination with anti-LGBTQIA+ laws. The simple implication is that countries criminalizing homosexuality are alienating a huge consumer base and jeopardizing their tourism economy. Thus, changes in the legal situation can increase the tourist figures as well as send a powerful brand image of tolerance and respect.

In December 2013 Richard Branson, head of the Virgin group of businesses, stated that he would not be investing in, or doing business with, Uganda due to its discrimination against its LGBTQIA+ community. He urged other businesses to follow suit. Similarly, the CEO of Apple Tim Cook commented that such laws are ‘very dangerous’ and that, regardless of the behaviour that state law might permit, Apple will ‘never tolerate discrimination’. [5] Foreign investment is very relevant in boosting a country’s economy and these examples clearly show that discriminatory laws are a hindrance to such investment. Thus, removal of such laws is necessary so that nations can effectively prosper.

In 2018, the Supreme Court struck down the 158-year-old Section 377 while advancing fundamental human rights. Before the judgment, LGBTQIA+ lived under the threat of arrest for just being who they are. The landmark ruling has brought the ‘pink economy’ of India out of its closet.

India is home to nearly 56 million LGBTQIA+ adults who earn about $113 billion a year. [6] As a result of the ruling, business houses can openly tap into the pink economy without any fear of criticism. “Such a significant legal change creates a visibility and comfort factor for many more companies, allowing them to comfortably include LGBTQIA+ people in their marketing efforts”, said Ian Johnson, chief executive of Paris-based firm Out Now Consulting. These companies find LGBTQIA+ people to be attractive prospects because of a prevalent concept called DINK – Double Income, No Kids. Moreover, India’s business sector has entered a new era of inclusiveness. Many multinationals in India and elsewhere have seen a link between inclusion of gay employees and better business outcomes. Consequently, they have and are taking steps to end discrimination in staff benefits in order to maintain a competitive workforce.

The LGBTQIA+ small businesses, that used to be online and had limited reach, are now ready to step ahead to reach the next level. Hotelier Keshav Suri, Director at the Lalit Suri Hospitality group has taken up the “Kittu su” – India’s first drag disco to all hotel chains in different cities. Hotel apps like Stay Uncle or Oyo Rooms have included LGBTQIA+ couples in their listings. Media have advertisements that reflect LGBTQIA+ people. Even though much is left to be done but all in all, the ruling has had a massive economic impact.

Although the availability of adequate data makes it difficult to accurately estimate the cost of homophobia, it is clear that a country stands to gain through the eradication of homophobia as well as through the establishment of a more accepting and inclusive legal environment. Leaders and advocates around the globe must seek to include LGBTQIA+ issues in discussions about economic policies. The establishment of India’s first LGBTQIA+ chambers of commerce is a significant step towards this direction. Development agencies like the World Bank, USAID, the United Nations and others are also conducting studies to propagate more inclusive policies.

Acceptance, democracy and legal rights are parts of a strategy that will lead to better lives for the LGBTQIA+ people – and for everyone else, too.

By Arpita Rathi
1st year undergraduate student, SRCC.








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