Over the past decades ASEAN countries have experienced rapid economic growth accompanied by a dramatic fall in poverty rates, but income inequality has not retreated. This research aims at identifying factors which could contribute to more equally distributed growth in ASEAN. To measure inclusive growth, we use a variable integrating per capita income growth and an equity index. A cross-country panel analysis of the impact of macro-structural factors on inclusive growth and its two components suggests that fiscal redistribution, female labor force participation, productivity growth, FDI inflows, digitalization, and savings significantly drive inclusive growth. A scenario analysis based on our econometric results suggests that the implementation of fiscal redistribution and labor market-oriented structural reforms could help significantly accelerate inclusive growth in ASEAN.
International Monetary Fund. Asia and Pacific Dept
This Selected Issues paper assesses the relationship between demographic trends and housing prices in Japan. Among various issues in the context of regional disparities, the paper focus on regional differences in population dynamics to try and understand to what extent demographic trends have influenced housing market prices in Japan in the past twenty years. Large cities, notably the Greater Tokyo area, are experiencing net migration inflows, while other regions are experiencing net migration outflows. Due to the durability of housing compared to other forms of investment, the magnitude of house price declines associated with population losses is larger than that of house price increases associated with population gains. These model-based predictions are likely to underestimate the actual fall in house prices associated with future population losses, as expectations of lower housing prices in the future could trigger more population outflows and disposal of houses, especially in rural areas. The paper suggests policy measures to help close regional disparities and avoid potential over-investment by taking account of demographic trends for housing supply.
Ms. Dalia S Hakura, Mr. Mumtaz Hussain, Ms. Monique Newiak, Mr. Vimal V Thakoor, and Mr. Fan Yang
A growing body of empirical evidence suggests that inequality—income or gender related—can
impede economic growth. Using dynamic panel regressions and new time series data, this paper
finds that both income and gender inequalities, including from legal gender-based restrictions, are
jointly negatively associated with per capita GDP growth. Examining the relationship for countries
at different stages of development, we find that this effect prevails mainly in lower income
countries. In particular, per capita income growth in sub-Saharan Africa could be higher by as much
as 0.9 percentage points on average if inequality was reduced to the levels observed in the fastgrowing
emerging Asian countries. High levels of income inequality in sub-Saharan Africa appear
partly driven by structural features. However, the paper’s findings show that policies that influence
the opportunities of low-income households and women to participate in economic activities also
matter and, therefore, if well-designed and targeted, could play a role in alleviating inequalities.
Ms. Sonali Jain-Chandra, Mr. Tidiane Kinda, Ms. Kalpana Kochhar, Shi Piao, and Johanna Schauer
This paper focusses on income inequality in Asia, its drivers and policies to combat it. It
finds that income inequality has risen in most of Asia, in contrast to many regions. While in
the past, rapid growth in Asia has come with equitable distribution of the gains, more
recently fast-growing Asian economies have been unable to replicate the “growth with
equity” miracle. There is a growing consensus that high levels of inequality can hamper the
pace and sustainability of growth. The paper argues that policies could have a substantial
effect on reversing the trend of rising inequality. It is imperative to address inequality of
opportunities, in particular to broaden access to education, health, and financial services.
Also fiscal policy could combat rising inequality, including by expanding and broadening the
coverage of social spending, improving tax progressivity, and boosting compliance. Further
efforts to promote financial inclusion, while maintaining financial stability, can help.
This paper leverages the IMF’s Financial Access Survey (FAS) database to construct a new composite index of financial inclusion. The topic of financial inclusion has gathered significant attention in recent years. Various initiatives have been undertaken by central banks both in advanced and developing countries to promote financial inclusion. The issue has also attracted increasing interest from the international community with the G-20, IMF, and World Bank Group assuming an active role in developing and collecting financial inclusion data and promoting best practices to improve financial inclusion. There is general recognition among policy makers that financial inclusion plays a significant role in sustaining employment, economic growth, and financial stability. Nonetheless, the issue of its robust measurement is still outstanding. The new composite index uses factor analysis to derive a weighting methodology whose absence has been the most persistent of the criticisms of previous indices. Countries are then ranked based on the new composite index, providing an additional analytical tool which could be used for surveillance and policy purposes on a regular basis.
The proposed FY 14–16 Medium-Term Budget was formulated within the Fund’s strengthened strategic planning framework and seeks to align the allocation of resources to the delivery of institutional priorities. Despite the additional resources that have been provided to meet crisis demands, crisis related work and overall work pressures remain elevated. At the same time, available resources are not being fully utilized. Therefore, the budget strategy—instead of asking for further additional resources—is geared toward making more efficient use of existing resources to reduce work pressures and meet new demands.
Adequate infrastructure has long been viewed as an important factor in economic development. Based on regressions covering 76 advanced and emerging market economies, this paper estimates the impact of infrastructure and investment on income distribution. It finds that better infrastructure, both quality and quantity, promotes income equality, while the link between investment and income distribution is weak.