Asian governments should use their fiscal policy more adeptly to combat the widening income gaps that are undermining decades of successful poverty reduction in the region, high-level panelists at the Asian Development Bank’s (ADB) 47th Annual Meeting said today.
“With inequality rising almost everywhere in Asia, governments need to urgently expand and improve their public investments in inclusive growth,” ADB President Takehiko Nakao told the seminar titled, Leveraging Fiscal Policy for Inclusive Growth.
Other panelists at the seminar were Paul Gruenwald, Chief Asia-Pacific Economist at Standard & Poor's Ratings Services; Marios Maratheftis, Global Head of Macro Research at Standard Chartered; Manuel Rodrigues, Portugal’s Secretary of State of Finance; and Naoyuki Shinohara, Deputy Managing Director at the International Monetary Fund.
More than 80% of Asia’s population live in countries where inequality is worsening, meaning that many are being left behind even as globalization, technological progress, and market reform have led to strong economic growth.
The speakers at the seminar discussed a range of issues including taxation to boost social and other spending, whether existing government programs are adequate to promote equality, and how to best balance spending to help the poorest without compromising fiscal sustainability.
Policies on both spending and revenue such as antipoverty programs and progressive taxation can promote inclusive growth. But among fiscal policy tools, government expenditure, more than taxation, has a tangible effect on boosting equality.
Public spending on education and health services improve the well-being of the poor and augment their productive capacity. Targeted subsidies and transfers protect the most vulnerable and deprived segments of society while better public infrastructure can make it easier for the poor to access good education and healthcare, delegates heard.