The Soft Economy

At the gracious invitation of Mrs. Dalal Al-Bahr, I attended the Dar Al-Bahr Forum titled “Soft Diplomacy.” The forum featured Mrs. Dalal Yacoub Al-Humaidi, wife of His Excellency Ambassador Khaled Al-Duwaisan, who shared with us key milestones from her journey alongside him in representing the State of Kuwait, with the United Kingdom marking the final chapter of his diplomatic career. The concept of soft diplomacy stayed with me, as it is not based solely on formal authority, but on building trust, understanding people, and forging relationships.

From this, I drew inspiration for this article: If women have made an impact in diplomacy and society, why should we not consider their economic impact?

The term I have chosen, “Soft Economy,” has a prior intellectual foundation in Japan. In the mid-1980s, the concept of “softnomics” was introduced in Japan within studies sponsored by the Japanese Ministry of Finance, presented as a lens for understanding an economy in which the value of knowledge, technology, and services is increasingly significant. However, it is not an economic school with a unified definition; therefore, I treat it here as a framework for analyzing women’s impact on the economy, rather than as a closed academic definition.

In this sense, the Soft Economy refers to the value women create when knowledge is transformed into investment, ideas into projects, relationships into partnerships, and expertise into strategic decisions. It is value produced by women as investors, entrepreneurs, leaders, and visionaries, through building trust, effective resource management, opportunity recognition, and disciplined implementation of decisions. Here, softness is not the opposite of strength, but a power that operates through accumulation and awareness, with its results evident in more robust companies, jobs, services, and broader markets.

Perhaps the clearest example linking women to growth can be found in Japan. In 1999, a team at Goldman Sachs’ Tokyo office, led by Kathy Matsui, then the bank’s chief Japan equity strategist, published a report titled “Womenomics: Buy the Female Economy.” The term combined “Women” and “Economics,” interpreting women’s participation and purchasing power as a growth opportunity for a country facing stagnation, an aging population, and a shrinking workforce. Framing women’s inclusion was not merely a rights issue, but an economic analysis arguing that a country that excludes a significant portion of its population’s skills limits its productive and innovative capacity.

Since 2013, the government of former Japanese Prime Minister Shinzo Abe has integrated the concept of “Womenomics” into its growth strategy, not treating it as a separate social issue. It expanded childcare services, strengthened support for mothers returning to work, and required large corporations to disclose indicators on women’s representation. In 2019, Goldman Sachs released its report “Womenomics 5.0: 20 Years On,” the fifth edition in the series two decades after the first, estimating that closing the gender employment gap could raise Japan’s GDP by approximately 10%, and up to 15% if the gender gap in working hours approached the average of Organisation for Economic Co-operation and Development (OECD) countries. However, the Japanese experience should not lead us to rest on numbers alone. The wage gap remains wide, many women work part-time, and progress toward leadership positions has not kept pace. The lesson is that genuine participation means not only women entering the labor market, but also access to good jobs, fair promotion pathways, workplace flexibility, and childcare services that do not penalize motherhood or fatherhood professionally.

From work, we move to capital. Capital is not just about its size, but also about who decides its direction. When women invest, they participate in ownership and decision-making, expanding the circle of funders for ideas and sectors worthy of attention. In the 2021 Women and Investing Study published by U.S. asset management firm Fidelity Investments, which analyzed 5.2 million self-directed investment accounts in the United States between 2011 and 2020, women’s annual returns outperformed by an average of 0.4 percentage points. This result does not imply that women constitute a single investment category or that outperformance is guaranteed, but it underscores that knowledge, confidence, and discipline in investing matter more than stereotypes. The more tools for saving and investing, along with information, women possess, the more they transition from waiting for opportunities to creating and directing them.

In another scene, entrepreneurs often begin with a need they know intimately, then transform it into a product or service, thereby expanding their circle of employees, suppliers, and customers around their venture.

Women’s entrepreneurship should not be reduced to home-based businesses, however important they may be; a small business can become a company when it secures funding, mentorship, and market access. In the 2018 Boston Consulting Group report titled “Why Women-Owned Startups Are a Better Bet,” conducted in collaboration with U.S. business accelerator network MassChallenge and covering 350 startups, companies founded or co-founded by women received average funding of $935,000, compared to $2.1 million for companies founded by men.

Nevertheless, within the study sample, these companies achieved 10% higher cumulative revenues over five years. This is not a universal rule, but it poses a serious question to investors: Does capital reach opportunities efficiently and equitably? The Organisation for Economic Co-operation and Development (OECD) emphasizes in its report “The Missing Entrepreneurs 2023” that financing remains a fundamental barrier for women entrepreneurs. Therefore, it is insufficient to merely encourage women to start businesses without providing financial literacy, investor networks, guarantees, mentorship, and genuine market access.

Women’s economic contribution is further realized through their access to decision-making positions. Therefore, I believe increasing the number of women on boards of directors and in executive roles is a priority, given that these positions enable participation in shaping strategy, directing investment, managing resources, and selecting talent. In the 2023 report “Diversity Matters Even More” by management consulting firm McKinsey & Company, companies in the top quartile for gender diversity in their executive teams were 39% more likely to achieve above-average financial performance compared to those in the bottom quartile. This statistical relationship does not guarantee profitability, but it supports the importance of expanding women’s participation in institutional leadership.

This leads me to reflect on domestic affairs, where we need organized efforts to increase women’s presence on boards of directors and in executive positions, and to provide female talent with clear opportunities for advancement. This begins with regular domestic data collection: How many women reach these positions? What authorities do they hold? How are they nominated, selected, and promoted? What barriers limit their progress? In addition, we need to understand the extent of women’s participation in investment and entrepreneurship, and their access to financing. Such information helps us develop pathways for qualification, nomination, and promotion; direct support to areas of need; and track progress using transparent metrics. My aspiration is to see more women participating in corporate leadership, directing capital, and shaping the future of the Kuwaiti economy.

Therefore, I believe Kuwait needs a permanent observatory, or an annual report titled “Kuwait Womenomics,” involving government entities, universities, the financial sector, and the private sector. This report would present aggregated data that respects privacy, covering job quality and promotions, business ownership and continuity, promising sectors, financing applications, approval rates, and terms. Data is not an end in itself, but a tool to guide financing, training, and policies. When gaps become clear, banks and funds can design products, guarantees, and mentoring programs that address actual needs rather than assumptions.

The inspiration I drew from the discussion on soft diplomacy at Dar Al-Bahr, and from the legacy of Mrs. Dalal Al-Humaidi, is that impact does not need to be loud to be profound. The acumen that builds bridges in diplomatic circles can, through the language of data, investment, and innovation, also serve the economy.

It is no longer acceptable, as we discuss ambitious development visions, to view women as a supplementary element. The soft economy is not a sector separate from the traditional economy; rather, it is a perspective that complements its tools and reveals untapped potential. When opportunities are accessible, data is clear, and financing is fair, women’s energy will transform from promising potential into an integral part of growth calculations and the future of the State of Kuwait.