Title
Fiscal Stimulus, Agricultural Growth and Poverty in Asia
Abstract
Recent debates on a sustainable recovery of the global economy have tended to
overemphasise the gsavings gluth hypothesis and the unavoidable imperative of
higher consumption in China and other emerging Asian countries. That
oversaving and not underinvestment is coming in the way of a quicker and more
durable recovery is not just simplistic but misleading from a medium- term
growth perspective for emerging Asian countries and other developing countries
in this region. Drawing upon country panel data for developing countries and a
sub-sample of Asian countries during the period 1991 to 2007, the present study
makes a case for a bold and coordinated fiscal stimulus, directed to stimulating
agricultural and overall growth, and mitigation of poverty and hunger. Our
simulations further suggest that poverty reduction is likely to be larger if the
fiscal stimulus is directed to social spending in health and education sectors.
Indeed, if our simulations of fiscal impacts have any validity, the dire predictions
of millions getting trapped in poverty and hunger may turn out to be exaggerated.
The prospects of a strong recovery led by fiscal stimulus are thus real and
achievable.
Raghav GAIHA
Faculty of Management Studies, University of Delhi, India
Katsushi S. IMAI
Economics, School of Social Science, University of Manchester, UK
Ganesh THAPA
International Fund for Agricultural Development, Rome, Italy
Woojin KANG
Economics, School of Social Sciences, University of Manchester, UK