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We show empirical evidence that there may not be a tradeoff between market income inequality and high sustained growth, which is key for poverty alleviation. We argue that the economies that achieved high sustained growth and low market income inequality are characterized by dynamism—a drive toward sophisticated export industries, innovation, and creative destruction and a high level of competition. What a country produces and how much it competes domestically and internationally are important for achieving fair and inclusive markets. We explore policy options to steer industrial and market structures toward providing growth opportunities for both workers and firms.

Taiwan Province of China --- Industrial policy. --- Fiscal policy. --- Economic policy.

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The COVID-19 pandemic risks exacerbating inequality in Asia. High frequency labor surveys show that the pandemic is having particularly adverse effects on younger workers, women and people that are more vulnerable. Pandemics have been shown to increase inequalities. As a result, income inequality, which was already high and rising in Asia before the pandemic, is likely to rise further over the medium term, unless policies succeed in breaking this historical pattern. Many Asian governments have implemented significant fiscal policy measures to mitigate the pandemic’s effect on the most vulnerable, with the impact depending on the initial coverage of safety nets, fiscal space, and degree of informality and digitalization. The paper includes model-based analysis which shows that policies targeted to where needs are greatest are effective in mitigating adverse distributional consequences and underpinning overall economic activity and virus containment.

Business and Economics --- Macroeconomics --- Diseases: Contagious --- Equity, Justice, Inequality, and Other Normative Criteria and Measurement --- Conflict --- Conflict Resolution --- Alliances --- Aggregate Factor Income Distribution --- Education: General --- Macroeconomics: Consumption --- Saving --- Wealth --- Labor Economics: General --- Health Behavior --- Education --- Labour --- income economics --- Infectious & contagious diseases --- Income inequality --- Consumption --- Labor --- Income --- COVID-19 --- Health --- National accounts --- Income distribution --- Economics --- Labor economics --- Communicable diseases --- Taiwan Province of China --- Civil society.

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This paper discusses three important extensions to the developing country scenario and adjustment model used in the World Economic Outlook exercises. First, the model is augmented to include fiscal and monetary sectors and now explicitly captures links among government policy, investment, output and inflation. Second, the external sector is modified to allow domestic demand factors to influence imports, as well as allowing flexibility in the financing of imports. Third, the model system is extended to the group of net-creditor countries, and for the oil exporters within this group, oil exports are modeled separately. The revised model is estimated for each of the 95 developing countries and parameter estimates for each of the main equations are presented. The paper also reports the results of four simulation exercises to illustrate how the new model system may be used to quantify the effects of changes in domestic policies and in the external environment.

Exports and Imports --- Macroeconomics --- Money and Monetary Policy --- Trade: General --- Current Account Adjustment --- Short-term Capital Movements --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Fiscal Policy --- Model Construction and Estimation --- General Aggregative Models: Forecasting and Simulation --- International economics --- Monetary economics --- Imports --- Current account balance --- Monetary base --- Exports --- Fiscal stance --- International trade --- Balance of payments --- Money --- Fiscal policy --- Money supply --- Taiwan Province of China

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This paper investigates the extent to which financial markets in the Pacific Basin Region have become more integrated, by analyzing the comovements of real interest rates. The paper uses cointegration and error correction models and draws inferences on the degree of capital market integration by looking at the speed of adjustment of real interest rates following a shock. The results show that there has been an increase in capital market integration with both U.S. and Japan during the 1980s. Japan has not, however, overtaken U.S. in dominating the financial markets of these countries, except possibly in the case of Malaysia. Capital market integration is found to be greater in Singapore, Hong Kong and Taiwan Province of China. On the other hand, Japan is the least integrated country with the United States.

Banks and Banking --- Exports and Imports --- International Investment --- Long-term Capital Movements --- Foreign Exchange --- Current Account Adjustment --- Short-term Capital Movements --- Financial Aspects of Economic Integration --- Interest Rates: Determination, Term Structure, and Effects --- Finance --- International economics --- Real interest rates --- Capital market integration --- Interest rate parity --- Market interest rates --- Capital controls --- Financial services --- Economic integration --- Balance of payments --- Interest rates --- International economic integration --- Capital movements --- Taiwan Province of China

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In most developing countries, poverty is more widespread and severe in rural than in urban areas. The author reviews some important aspects of rural poverty and draws key implications for public policy. He presents a policy framework for reducing poverty, taking into account the functional differences and overlap between the rural poor. Several policy options are delineated and explained, including stable management of the macroeconomic environment, transfer of assets, investment in and access to the physical and social infrastructure, access to credit and jobs, and provision of safety nets. Finally, some guideposts are identified for assessing strategies to reduce rural poverty.

Infrastructure --- Macroeconomics --- Social Services and Welfare --- Poverty and Homelessness --- Measurement and Analysis of Poverty --- Economic Development: Agriculture --- Natural Resources --- Energy --- Environment --- Other Primary Products --- Economywide Country Studies: General --- Welfare, Well-Being, and Poverty: General --- Labor Economics: General --- Government Policy --- Provision and Effects of Welfare Program --- Aggregate Factor Income Distribution --- Investment --- Capital --- Intangible Capital --- Capacity --- Poverty & precarity --- Labour --- income economics --- Social welfare & social services --- Poverty --- Labor --- Poverty reduction --- Income --- National accounts --- Labor economics --- Saving and investment --- Taiwan Province of China