How Anti-LGBT Laws Are Bad for Economies

It’s not just ticket holders and artists who were left disappointed after the cancellation of the Good Vibes Festival last week but also hundreds of businesses and vendors in Kuala Lumpur who lost out on the potential revenue of what was expected to be a full weekend of concerts. The entire music festival was canceled by the Malaysian government on Saturday after British pop-rock singer Matty Healy of The 1975 kissed his male bandmate on stage the night before in an inebriated protest of the country’s strict anti-LGBT laws.

The incident has brought international attention to—as well as sparked debates over—the state of LGBT rights and activism in the Southeast Asian country. But it’s not the first time—nor will it be the last—that a place’s LGBT politics impact its bottom line.

Malaysia, where “carnal intercourse against the order of nature” is punishable by up to 20 years in prison or whipping, is not alone: 66 jurisdictions worldwide have criminalized private and consensual same-sex sexual activity, according to a database from Human Dignity Trust. 

Many governments, including countries around the world and even some states in the U.S.,  have implemented and continue to maintain exclusionary laws because of public support for social conservatism. But the knock-on economic effects are significant. 

Lee Badgett, an economist at the University of Massachusetts Amherst and author of The Economic Case for LGBT Equality, tells TIME that her research has found anti-LGBT laws and discrimination to cost as much as 1% of a country’s gross domestic product.

“We can look at all the different things that matter for how well a country performs at the GDP level. Even when we take that into account,” says Badgett, “we definitely still see an association between more inclusive laws, more inclusive attitudes towards LGBT people and having a stronger economy.”

Here are some of the ways anti-LGBT policies can dent economies.

Education

Crucial in helping a nation thrive is human capital, which Lee says is the “aspect of human beings that make economies grow and perform well.” But LGBT exclusion can begin to have an effect as early as one’s schooling, as education is a key factor of human capital: an individual’s potential earnings rise by 10% a year every time they go back to school.

A 2018 UNESCO report found that a handful of countries in Asia, like Thailand and the Philippines, have high drop-out rates among LGBT students, particularly transgender learners. Similarly, in the U.S., a 2019 survey from the Gay, Lesbian and Straight Education Network found that LGBT students who were exposed to discrimination were nearly three times as likely to have missed school in the past month compared to those who did not.

Quality of workforce and gains

Discriminatory policies can also affect productivity, when employers tend to exclude queer people even though they have similar, or better qualifications. Workplace discrimination, even if inexplicit, has led many LGBT workers in the U.S. to quit their jobs. And a 2021 survey by the Williams Institute at UCLA School of Law found that 8.9% of LGBT workers were denied jobs or laid off during the COVID-19 pandemic because of their sexuality.

Research by the International Labor Organization in 2022 shows that as much as 32% of LGBT migrant workers hide their identity or orientation out of fear of safety or job security. And in India, the delay of a passage of a same-sex marriage law and ongoing concerns about LGBT rights is driving queer people out of the world’s most populous country, in a phenomenon known as the “gay brain drain.”

Lee says she’s found that, at the same time, companies with more inclusive policies towards LGBT people tend to have more positive financial outcomes. “They have higher productivity, they have higher stock prices,” she adds.

Foreign direct investment, foreign business, and foreign aid

In a globalized world, companies evaluate countries for their treatment of citizens to check if investing there is a sound choice. A 2021 report from business coalition Open for Business found that countries that do not criminalize homosexuality have 4.5 times higher rates of foreign direct investment compared to countries.

After Uganda enacted a law this May that punishes homosexuality by death, Open for Business warned in a statement that the policy runs counter to business interests, and that the law “would undermine Uganda’s attractiveness as a place to do business and invest.”

Anti-LGBT laws can also affect foreign aid. Despite an expected acceleration in GDP growth to 6%, Uganda remains one of the most impoverished states worldwide, and is heavily reliant on foreign aid. USAID warned that the law will "directly impede our ability to provide effective USAID assistance," and the development agency said it is now reassessing how it will engage with the country. And in an interview with DevEx, World Bank President David Malpass said the global financial institution is also reviewing its engagement with the African state, calling the law an “affront to the values of the World Bank.”

Tourism

Exclusionary measures have a significant impact on economic gains from tourism. Another survey by Open for Business, found that the Caribbean, a region popular for its idyllic beaches and islands, dissuaded some 18% of potential tourists from the U.K., U.S., and Canada from visiting the region within the next three years because of a lack of inclusive policies. The region stands to lose as much $689 million, or 0.93% of its regional GDP, over anti-LGBT laws and stigma. 

“People do pay attention to especially these very harsh bills that are likely to have consequences for potentially even tourists,” Lee tells TIME.

Back in Malaysia, concertgoers have already been lamenting that so many international artists skip over the country during their international tours, a trend the fracas over Matty Healy looks likely to exacerbate. Meanwhile, observers and activists warn that with upcoming state elections in August, conservative-leaning politicians are likely to piggyback on the incident to promote their anti-LGBT agenda. Conservative leaders have even publicly made peace with the idea that their principles may come at the cost of being able to host shows and events like the Good Vibes Fest. But it’s more than just concerts that the country risks losing out on.