Full Report - Subregional Office for East and North-East Asia - escap

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ECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2013 Figure 4.10. Relationship between government expenditures and GDP per capita, 2005-2007 Government expenditure (percentage of GDP) 50 40 30 20 10 0 LSO MDA BIH BRA ZAF IRQ MNG MKD RBC BURLVA RUS MAERGY KNA LTU BTN CHN IRN GEO HND IND ARM PRY MDV BLR SRB UKR SLV CRI KAZ MUS THA PER CHL HUN EST POL PRT GRC ITA SYC MLT SVN CZE ESP SVK NZL 0 10 000 20 000 30 000 40 000 50 000 GDP per capita, PPP (constant 2005 international $) KOR FRA DNKSWE FIN BEL AUT JPN IRL DEU NLD GBR ISL CAN AUS CHE USA HKG NOR Source: ESCAP, based on data from International Monetary Fund, Government Finance Statistics. Note: The fitted line is based on a weighted least squares regression in which the weights represent PPP-adjusted GDP at constant 2005 international $. The size of the bubbles represents PPP-adjusted GDP, and the colour shows country groupings: green for Asia and the Pacific; brown for the EU-15; and blue for the rest of the world. Country codes - countries and areas of the ESCAP region are available in the explanatory note. - non- ESCAP members; names and codes are as follows: AUT - Austria; BEL - Belgium; BGR - Bulgaria; BIH - Bosnia and Herzegovina; BLR - Belarus; BRA - Brazil; CAN - Canada; CHE - Switzerland; CHL - Chile; CRI - Costa Rica; CZE - Czech Republic; DEU - Germany; DNK - Denmark; EGY - Egypt; ESP - Spain ; EST - Estonia; FIN - Finland; FRA - France; GBR - United Kingdom of Great Britain and Northern Ireland; GRC - Greece; HND - Honduras; HUN - Hungary; IRL - Ireland; IRQ - Iraq; ISL - Iceland; ITA - Italy; KNA - Saint Kitts and Nevis; LSO - Lesotho; LTU - Lithuania; LVA - Latvia; MAR - Morocco; MDA - Republic of Moldova; MKD - The former Yugoslav Republic of Macedonia; MLT - Malta; MUS - Mauritius; NLD - Netherlands; NOR - Norway; PER - Peru; POL - Poland; PRT - Portugal; PRY - Paraguay; ROU - Romania; SLV - El Salvador ; SRB - Serbia; SVK - Slovakia; SVN - Slovenia; SWE - Sweden; SYC - Seychelles; UKR - Ukraine; USA - United States of America; and ZAF - South Africa. Figure 4.11. Relationship between government revenues and GDP per capita, 2005-2007 Government revenue (percentage of GDP) 60 40 20 LSO DNK SWE FIN BLR FRA BEL SRB RUS HUN UKR MDA MDV SYC SVN ITA ISL AUT JPN IRLNLD DEU MNG BIH BGR POL PRT MLT CZT GNZ RCL ESP GBR CAN IRQ ZAF BRA MAR MKD IRN LVA ROU LTU SVK AUS CHE BTN CHN KNA KOR GEO EGY CHL CRI HND KAZ PRY THA IND ARM PER MUS SLV EST 0 0 10 000 20 000 30 000 40 000 50 000 GDP per capita, PPP (constant 2005 international $) Source: ESCAP, based on data from International Monetary Fund, Government Finance Statistics. Note: See notes for figure 4.10. USA HKG NOR 194
INVESTING IN INCLUSIVE AND SUSTAINABLE DEVELOPMENT CHAPTER 4 stability can be achieved as long as policies are designed carefully and implementation is effective. Inclusive and sustainable development alongside fiscal sustainability and price stability can be achieved The simulation exercise analyses the impact of greater public investment on the trajectories of public debt and price levels. In addition to the direct impact of additional public investment on output growth, the analysis takes into account the macroeconomic spillover effects of the increased spending. These indirect impacts take the form of greater labour force participation, higher wage earnings of newly hired workers and greater labour productivity. Additional public spending affects government consumption and fixed investment through, for instance, various projects to expand and maintain access to energy and public services in lagging areas. As a result, total factor productivity benefits from innovative ideas and knowledge exchanges made possible by a larger pool of educated and healthy workers. At the same time, private domestic investment, merchandise imports and population growth are also affected. Depending on the extent to which these indirect impacts are generated by fiscal expenditure, three likely scenarios are depicted, in the analysis which covers eight of the ten Asia-Pacific economies for the period 2013-2030 and for which expenditure investment estimates for inclusive and sustainable development are elaborated above. 12 Debt sustainability The future public debt paths shown in figure 15 are generally sustainable. In India, the Russian Federation, Thailand and Turkey, public indebtedness rises after the introduction of the inclusive and sustainable development framework if the indirect impacts of the framework for inclusive and sustainable development are relatively weak (“small macro spillovers” scenario). The debt ratio declines steadily, however, once the indirect impact of greater expenditure to strengthen health, education, energy and income security takes effect and output growth accelerates. As economic growth is fuelled by both fiscal injections and more favourable macroeconomic structure, debt ratios decline to levels close to those observed in 2012. As expected, in these economies, debt ratios fall more steeply if the indirect impacts are stronger, such as under the “moderate macro spillovers” scenario. In other countries, the sustainability of public debt is conditional on a sizeable improvement in macroeconomic fundamentals. Thus, in Indonesia, Malaysia and the Philippines, public debt displays an increasing trend under the scenarios that assume small or moderate macroeconomic-spillover effects. In these countries, the indirect impact of increased public spending on growth must be greater to secure fiscal sustainability, as depicted in the “large macro spillovers” scenario. Indeed, figure 4.12 shows that for these three economies, the average GDP growth rates over the period 2013-2030 under the “small” or “moderate” scenarios are only marginally higher than their baseline cases. This illustrates the importance of the quality of programme design and implementation in shaping the success of a policy shift towards inclusive and sustainable development. The public debt path taken by China also exhibits an increasing trend under the “small macro spillovers” scenario but in terms of level (about 50% of GDP by 2030), this does not appear excessively high. The future upward trend is also in line with the baseline case. 13 Price stability Inflation also remains manageable under the simulation scenarios considered here (see figure 4.14). In most cases, prices pressures either do not deviate much from the baseline cases or do not exceed the rates observed in the past decade. In cases in which price levels are projected to jump temporarily, such as in Indonesia and the Philippines under the “large macro spillovers” scenario, the rise is partly attributable to tight labour market conditions and higher worker earnings, and remains within an acceptable range, as highlighted in chapter 3. 14 195
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UNDER EMBARGO UNTIL 03.30 GMT, THUR
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ECONOMIC AND SOCIAL SURVEY OF ASIA
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PREFACE The Economic and Social Sur
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EXECUTIVE SUMMARY FORWARD-LOOKING M
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on education and health. Indebted c
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ACKNOWLEDGEMENTS This report was pr
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CONTENTS Page Foreword ............
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CONTENTS (continued) Page Australia
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BOXES Page A. Forward-looking macro
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FIGURES (continued) Page 1.20. Ineq
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TABLES Page 1.1. Main destination e
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References to dollars ($) are to Un
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ABBREVIATIONS ADB AEC APEC ASEAN AS
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SOURCES OF QUOTATIONS (a) Page 1: a
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WHY FORWARD-LOOKING MACROECONOMIC P
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▲ WHY FORWARD-LOOKING MACROECONOM
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THE STATE OF INCLUSIVE AND SUSTAINA
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MACROECONOMIC PERFORMANCE AND POLIC
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DEVELOPMENTAL MACROECONOMICS: THE C
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Page 237 and 238: 207 REFERENCES
Page 239 and 240: REFERENCES REFERENCES Abdyrasulova
Page 241 and 242: REFERENCES (2012a). The debate on e
Page 243 and 244: REFERENCES (2012). World Energy Out
Page 245 and 246: REFERENCES Ma, K-H (2008). Assessme
Page 247 and 248: REFERENCES (2011b). Child Poverty i
Page 249 and 250: REFERENCES United Nations, Economic
Page 251 and 252: STATISTICAL ANNEX STATISTICAL ANNEX
Page 253 and 254: STATISTICAL ANNEX Table 2. Poverty
Page 255 and 256: STATISTICAL ANNEX Table 4. Resource
Page 257 and 258: STATISTICAL ANNEX Technical notes T
Page 259 and 260: STATISTICAL ANNEX Source: Barro, Ro
Page 261 and 262: STATISTICAL ANNEX estimates based o
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Page 265 and 266: READERSHIP SURVEY The Macroeconomic
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