The June issue of IMF's Finance and Development magazine is out. Focus is on Asia.
In Asia's Winds of Change, David Burton, Wanda Tseng, and Kenneth Kang analyze Asia's growth over the last 50 years, the crisis in the late 1990s and the new challenges of globalization.
This is their take on Growth and Poverty in Asia.
Although globalization has helped improve growth prospects in Asia, the benefits from this growth have not been evenly shared. Asia remains home to some of the poorest countries in the world, and even in the fastest-growing economies, such as China and India, vast areas remain poor and underdeveloped. In many countries, including the more developed ones, like Japan and Korea, income inequality is widening, and economies are becoming increasingly polarized, as some sectors and groups have surged ahead of others.
To ensure that the benefits from globalization are more evenly shared, Asian countries will need to pursue reforms that will expand opportunities for the poorest groups and regions to catch up. These would include broadening financial systems to improve access to credit and insurance, particularly by small enterprises and the working poor; adopting labor reforms that strike the right balance between flexibility and protection of basic employee security; establishing social safety nets that encourage labor flexibility; and, in some countries, improving the functioning of land markets to unlock their productive potential. Policies to improve the poor's access to quality health care, education, and infrastructure will also assist in enhancing their economic contribution. Finally, prudent macroeconomic policies that promote financial stability can help protect the poorest groups, who, because of a lack of assets and instruments, are more vulnerable to financial crisis.