Economic and Social Survey of Asia and the Pacific 2017: Governance and Fiscal Management

Flagship1 May 2017

Although the recent economic expansion of countries in Asia and the Pacific has been steady, it is modest compared with the recent historical trend owing to prolonged weak external demand, rising trade protectionism and heightened global uncertainty. At the same time, decades of rapid economic growth, facilitated by globalization and technology, came at the expense of rising inequalities and environmental degradation. Addressing such economic, social and environment challenges in a coherent and decisive manner will be critical for the region’s future.

In view of such challenges and the terms of the 2030 Agenda for Sustainable Development, the Economic and Social Survey of Asia and the Pacific 2017 highlights the importance of better governance and effective fiscal management. In particular, it is found in the Survey for 2017 that the quality of governance affects development outcomes through its impact on the composition and efficiency of public expenditure. At the same time, weak governance partially explains the low levels of tax revenues in several countries in the region. Governance has impacts on the way public revenues are raised, especially its effects on tax morale, as the willingness to pay taxes is affected by perceptions of how well tax revenues are used.

It is argued in the Survey for 2017 that transparency and accountability in public administration can be improved and strengthened by ensuring the production of and access to key data and information, and by developing public administration capacities to monitor, evaluate and audit policies and actions. Inclusive institutions, where public service beneficiaries can exchange views with the Government, could also be instrumental for raising tax revenues and making expenditures more efficient. The Survey also highlights the role of e-government, information and communications technology and decentralization in improving governance in the context of fiscal management.

In the Survey, it is further emphasized that the potential benefits of better governance are large and wide ranging, including better health outcomes in the Pacific, economic diversification in North and Central Asia, decent jobs in South and South-West Asia, ecological innovations in East and North-East Asia and the narrowing of development gaps in South-East Asia.

Message from the Executive Secretary

Chapter 1

The first chapter of the Survey for 2017 provides a macroeconomic assessment of the region, with a discussion of risks to the economic outlook, and it highlights the importance of improving the quality of economic growth. A case is made for a proactive role for fiscal policy and supporting structural reforms not only to enhance economic potential but also to strengthen social protection and improve resource efficiency.

Chapter 2

The second chapter provides a more disaggregated analysis of economic issues and indicates that the potential benefits of better governance and effective fiscal management are large and wide-ranging, including: better health outcomes in the Pacific; economic diversification in North and Central Asia; decent jobs in South and South-West Asia; ecological innovations in East and North-East Asia; and narrowing development gaps in South-East Asia.

Chapter 3

The third chapter contains a study of the relationship between governance and various dimensions of sustainable development; the study delves in detail into analysing the role of governance in improving fiscal management and contains a discussion of a range of policy options to improve the quality of governance in support of better fiscal management.

Policy Briefs

Country Briefing Notes

Contents

  • Foreword
  • Preface
  • Executive Summary
  • Acknowledgments
  • Explanatory notes
  • Acronyms
  • Chapter 1. Economic Outlook and Quality of Growth
    1. Introduction
    2. Economic Performance and Outlook
    2.1. Asia-Pacific economies lead global growth but at less rapid pace
    2.2. Private investment has not been forthcoming
    2.3. Weak trade and volatile capital flows present a tough external environment
    2.4. A modest recovery is under threat
    3. Economic Policy Considerations
    3.1. Monetary policy space and efficacy are declining
    3.2. Fiscal space should be used effectively
    3.3. Structural reforms could lift productivity
    4. Enhancing the Quality of Growth
    4.1. Poverty and inequality call for labour market and fiscal measures
    4.2. Social protection could reduce poverty and strengthen domestic demand
    4.3. Environmental degradation is too costly to overlook
    5. Concluding remarks
  • Chapter 2. Perspectives from Subregions
    1. Introduction
    2. South and South-West Asia
    2.1. Macroeconomic performance and outlook
    2.2. A selected policy challenge: structural transformation for inclusive development
    3. Pacific
    3.1. Macroeconomic performance and outlook
    3.2. A selected policy challenge: fiscal policy for better health outcomes
    4. East and North-East Asia
    4.1. Macroeconomic performance and outlook
    4.2. A selected policy challenge: role of governance in clean energy innovation policies
    5. North and Central Asia
    5.1. Macroeconomic performance and outlook
    5.2. A selected policy challenge: deepening integration for economic diversification
    6. South-East Asia
    6.1. Macroeconomic performance and outlook
    6.2. A selected policy challenge: narrowing development gaps through better governance
    7. Concluding remarks
  • Chapter 3. Better Governance for Effective Fiscal Management
    1. Introduction
    1.1. Definition of governance
    1.2. Why is governance relevant?
    2. Governance: Measurement, Trends and Impact on Development in Asia and the Pacific
    2.1. Conceptual issues in measuring governance
    2.2. Explaining trends in governance: a socioeconomic perspective
    2.3. The impact of governance on development outcomes
    3. Governance and Fiscal Management
    3.1. Governance and effective public expenditure management
    3.2. Governance and tax revenues
    4. Policies to Improve Governance for Better Fiscal Management
    4.1. Improving the production of and access to data and information
    4.2. Managing and monitoring the implementation of policies
    4.3. E-government and financial inclusion for better coordination and effectiveness
    5. Concluding remarks
  • Annex
  • References