Fiscal Policy Effectiveness and Inequality: Efficacy of Gender Budgeting in Asia Pacific

Gender budgeting is a fiscal approach that seeks to use a country’s national and/or local budget(s) to reduce inequality and promote economic growth and equitable development. While literature has explored the connection between reducing gender inequality and achieving growth and equitable development, more empirical analysis is needed to determine whether gender budgeting really curbs gender inequality. The study follows the methodology of Stotsky and Zaman (2016) to investigate across Asia Pacific countries the impact of gender budgeting on promoting gender equality, and also increasing fiscal spending on health and education. The study classifies Asia Pacific countries as ‘gender budgeting’ or ‘non-gender budgeting’ according to whether they have formalized gender budgeting initiatives in laws and/or budget call circulars. To measure the effect of gender budgeting on reducing inequality, the paper measures the correlation between gender budgeting and the Gender Development Index (GDI) and Gender Inequality Index (GII) scores in each country. The data for our gender inequality variables are mainly drawn from the IMF Database on gender indicators and the World Development Indicators (WDI) database, over 1990-2013. The results show that gender budgeting has significant effect on increasing GDI and small but significant potential to reduce GII. These results strengthen the rationale for employing gender budgeting to promote inclusive development. However, our empirical results show no prioritization for gender budgeting in the fiscal space of health and education sectors in the region.