Research Topics

Efficacy of Gender Budgeting in Asia Pacific

Gender budgeting is a fiscal approach that seeks to use a country’s national and/or local budget(s) to reduce inequality and promote economic growth and equitable development. While the literature has explored the connection between reducing gender inequality and achieving growth and equitable development, more empirical analysis is needed on whether gender budgeting reduces gender inequality. Our study follows the methodology of Stotsky and Zaman (2016) to investigate the impact of gender budgeting on promoting gender equality across Asia Pacific countries. The study classifies Asia Pacific countries as gender budgeting or non-gender budgeting according to whether they have formalized gender budgeting initiatives in laws and/or budget call circulars. To measure the effect of gender budgeting on reducing inequality, we measure the correlation between gender budgeting and the Gender Development Index (GDI) and the Gender Inequality Index (GII) scores in each country. The data for our gender inequality variables are mainly drawn from the IMF database on gender indicators and the World Development Indicators database over the 1990–2013 period. Our results show that gender budgeting has a significant effect on increasing the GDI and a small but significant potential to reduce the GII, strengthening the rationale for employing gender budgeting to promote inclusive development. However, our empirical results show no prioritization of gender budgeting in the fiscal space of health and education sectors in the region.

Recovery Prospects and the Future

The global crisis of 2007–09 affected developing Asia largely through a decline in exports to the developed countries and a slowdown in remittances. This happened very quickly, and by 2009 there were already signs of recovery (except on the employment front). This recovery was led by China’s impressive performance, aided by a large stimulus package and easy credit. But China needs to make efforts toward rebalancing its economy. Although private consumption has increased at a fast pace during the last decades, investment has done so at an even faster pace, with the consequence that the share of consumption in total output is very low. The risk is that the country may fall into an underconsumption crisis.

Looking at the medium and long term, developing Asia’s future is mixed. There is one group of countries with a highly diversified export basket. These countries have an excellent opportunity to thrive if the right policies are implemented. However, there is another group of countries that relies heavily on natural resources. These countries face a serious challenge, since they must diversify.