Fiscal Stimulus, Agricultural Growth and Poverty in Asia

27 Pages Posted: 19 May 2012

See all articles by Raghav Gaiha

Raghav Gaiha

University of Delhi - Department of Economics; Australian National University (ANU)

Katsushi S. Imai

University of Manchester - School of Social Sciences

Ganesh Thapa

Independent

Woojin Kang

University of Manchester

Date Written: June 2012

Abstract

Recent debates on a sustainable recovery of the global economy have tended to overemphasise the 'savings glut' 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 subsample of Asian countries during the period 1991–2007, this 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.

Suggested Citation

Gaiha, Raghav and Imai, Katsushi S. and Thapa, Ganesh and Kang, Woojin, Fiscal Stimulus, Agricultural Growth and Poverty in Asia (June 2012). The World Economy, Vol. 35, Issue 6, pp. 713-739, 2012. Available at SSRN: https://ssrn.com/abstract=2062684 or http://dx.doi.org/10.1111/j.1467-9701.2011.01432.x

Raghav Gaiha (Contact Author)

University of Delhi - Department of Economics ( email )

Delhi-110007
India

Australian National University (ANU) ( email )

Canberra, Australian Capital Territory 2601
Australia

Katsushi S. Imai

University of Manchester - School of Social Sciences ( email )

Oxford Road
Manchester, M13 9PL
United Kingdom

Ganesh Thapa

Independent ( email )

No Address Available

Woojin Kang

University of Manchester ( email )

Oxford Road
Manchester, M13 9PL
United Kingdom

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