Countries that have decriminalised homosexuality have 4.5 times higher rates of foreign direct investment (FDI) than countries that criminalise consensual same-sex relationships, M V Lee Badgett writes.
ADVERTISEMENTSpring in Samarkand returns flowering trees and vivid colour to the ancient Silk Road trading post, along with some less traditional arrivals this year – officials from the European Bank for Reconstruction and Development (EBRD).
The theme of EBRD’s annual meeting in Samarkand is investing in resilience to promote economic stability and growth.
Modern bankers have new tools to use to encourage economic growth in Uzbekistan and other countries in Central Asia.
One of the least known but potentially powerful tools is promoting the economic inclusion of lesbian, gay, bisexual, transgender, and intersex people (LGBTI) — a strategy increasingly embraced by global financial institutions, development banks, and multinational corporations.
Barriers remain high
LGBTI people face challenges to their full participation in economies everywhere, but the barriers are particularly high in Uzbekistan and Turkmenistan, the last two countries in Central Asia that criminalise homosexuality.
Others in the region dropped those legal penalties for LGBTI people after becoming independent from the Soviet Union.
In January, Singapore became the latest country to decriminalise, with the prime minister noting that gay people “contribute fully to Singapore” and acknowledging that their hopes of being respected and accepted are reasonable.
This landmark legal change came after a 15-year compromise in which Singaporean legislators left the criminal law in place but agreed not to enforce it.
Unlike Singapore, though, Uzbekistan has been particularly aggressive in arresting, torturing, and incarcerating gay men.
Police arrest and beat gay men because of the “sin” they are committing or for financial gain, demanding payments to hold back on releasing information to the men’s families or to the public.
Gay men, their friends, and sometimes their families must pay bribes to be released from police custody. Social media vigilantes also target LGBTI people and allies for harassment and violence.
Violence and stigma endanger LGBTI people's health
These examples of poor treatment help us see the connection between antigay laws and practices to the needs of Uzbekistan’s economy.
The most immediate effect is on health, a vital aspect of what economists call human capital—the energy, skills, knowledge, and creativity that people can deploy in the economy.
Beatings and other forms of violence can generate physical injuries as well as psychological damage, diminishing the human capital available to the economy.
In addition, human rights agencies report that Uzbek gay men have experienced forced anal examinations (considered by many to be a form of torture) and sometimes resort to suicide attempts.
HIV clinics have even reported gay men to the government and police, discouraging people from getting the testing and treatment that will prolong their lives and prevent transmission of HIV.
Even those LGBTI people who haven’t yet had such experiences would logically fear such treatment if they were more open.
Hiding one’s sexuality or gender identity might help avoid some harms of homophobia or transphobia, but global evidence shows that staying in the closet also contributes to psychological and physical health conditions.
ADVERTISEMENTOverall, the research shows that violence, stigma, and discrimination make LGBTI people sick.
Exclusion also drains the economy
These are also conditions that make it hard to conduct surveys on what happens to LGBTI people in other parts of the economy.
As a result, we have little research on how young LGBTI people survive their schooling in Uzbekistan or on how much discrimination LGBTI people face in the workplace or other marketplaces.
However, it is reasonable to think that LGBTI people are also vulnerable to maltreatment in those settings in Uzbekistan.
Bullying, harassment, and discrimination also reduce the educational achievements and work productivity of LGBTI people, holding back Uzbekistan’s businesses and overall economy even more.
ADVERTISEMENTThese forms of exclusion in education, health, and the workplace add up to a big drain on a country’s economy.
Countries that have exclusionary LGBTI-related laws and public opinion have lower GDP per capita. Studies from other countries put the cost of anti-LGBTI treatment at 1% or more of a country’s GDP.
Meanwhile, there is a strong correlation between inclusion and growth
A recent study focusing on Uzbekistan points out that countries that have decriminalised homosexuality have 4.5 times higher rates of foreign direct investment (FDI) than countries that criminalise consensual same-sex relationships.
That might be one reason why Uzbekistan has the lowest rate of FDI as a percentage of GDP in the Central Asia region.
There is a strong correlation between LGBTI inclusion and both the World Economic Forum’s Global Competitiveness Index and the World Bank’s Human Capital Index.
ADVERTISEMENTAttracting foreign investment is one of Uzbekistan’s economic priorities, along with expanding the market for its goods and services in other countries as well as local tourism.
One way the EBRD can help Uzbekistan achieve those goals is to help bring Uzbekistan’s law and practice into alignment with human rights and with smart economic policy.
Inclusion of LGBTI people — starting with eliminating the harmful abuse of gay men — and of other vulnerable groups is an important strategy for a resilient, thriving economy.
M V Lee Badgett, PhD is a professor of economics at the University of Massachusetts Amherst, and the author of The Economic Case for LGBT Equality: Why Fair and Equal Treatment Benefits Us All.
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