The Role of Fiscal Policy in Rebalancing Developing Asia's Growth

Rebalancing growth toward domestic demand has emerged as a key postcrisis challenge for sustaining developing Asia’s rapid growth in the medium and long term. The central objective of this paper is to explore the role of fiscal policy in the region’s rebalancing process. What matters most for rebalancing are specific fiscal measures tailored to each country’s unique circumstances. In this context, the paper examines the potential contribution of fiscal policy to rebalancing growth in the People’s Republic of China, the Republic of Korea, the Philippines, and Singapore. As expected, the nature of fiscal measures that can promote rebalancing differs substantially across the four countries and depends on the nature of the rebalancing process in each country.