Government and Governance

Transcription

1 264 Government and Governance Fiscal deficits fell in 2010 as economies throughout the region recovered from the financial crisis. Government spending on social security and welfare have been rising throughout the region. Many economies are starting to provide basic social security for their citizens. Government education expenditure is often more than double that for health services. This is in contrast to most developed economies where government expenditures for health care are substantially higher than for education. Perceived corruption and per capita incomes are closely associated. Public officials in poor countries are far more likely to be perceived corrupt than in richer countries. The days needed to register a new business vary enormously within the region from 1 day to more than 100 days. But in the last five years, most countries have managed to shorten the process. Key Trends Fiscal deficits fell in 2010 in most economies as the region recovered from the financial crisis. Figure 7.1 shows fiscal balance, the deficits being the excess of current expenditures over government revenue and current grants received. Bars to the right in Figure 7.1 indicate surpluses; to the left, deficits. Two-thirds of the 32 economies listed in Figure 7.1 either reduced their deficits or increased their surpluses compared with 2009 and the unweighted average deficit for all 32 fell by 1.4% of GDP. Particularly marked improvements were recorded by Armenia; Hong Kong, China; the Republic of Korea; the Maldives; Mongolia; Solomon Islands; and Timor-Leste., Bhutan, the Kyrgyz Republic, Pakistan, and Samoa were among the few whose deficits increased or surpluses fell, suggesting that their recovery from the crisis has been slower than in most other economies in the region. Over the last decade, most governments in the region have increased their expenditures on social security and welfare as a ratio to GDP but most are still far from matching the 8% 14% ratios in the developed economies of, Japan, and New Zealand. Figure 7.2 presents the government expenditures on social security and welfare as a percentage of GDP for 30 economies in the region. Economies with the highest expenditures relative to GDP include the three developed economies, Japan, and New Zealand together with Armenia, Georgia, and Mongolia. Some economies are putting social security systems in place although these are still far from being comprehensive, namely, the People s Republic of China (PRC), the Maldives, Singapore, and Tajikistan. In 2000, expenditures in social security and welfare of these economies were less than 2% of GDP but there has been substantial progress in There are some economies where these expenditures were around 1% of GDP in 2000 and have barely increased since then. Examples include,,, the Philippines, and Thailand. Source: Table 7.1. Figure 7.1 Fiscal Balance as a Percentage of GDP, 2009 and 2010 Timor-Leste Kiribati Solomon Islands Papua New Guinea Uzbekistan Mongolia Indonesia Azerbaijan China, People's Rep. of Lao PDR Kazakhstan Thailand Tonga Armenia Philippines Fiji, Rep. of Bangladesh Bhutan Cambodia Kyrgyz Republic Georgia Pakistan Tajikistan Sri Lanka Samoa Maldives

2 GOVERNMENT AND GOVERNANCE 265 Figure 7.2 Government Expenditure on Social Security and Welfare as a Percentage of GDP, 2000 and 2010 or Latest Year Japan New Zealand Armenia Mongolia Georgia Maldives Tajikistan Taipei,China Azerbaijan China, People's Rep. of Singapore Kyrgyz Republic Sri Lanka Kiribati Thailand Tonga Philippines Samoa Brunei Darussalam Cambodia Papua New Guinea Bangladesh Fiji, Rep. of Vanuatu Source: Table Most governments in the region spend far more on education than on health. The Kyrgyz Republic, Tonga, and the three developed member economies, Japan, and New Zealand were exceptions, where health expenditures outstripped education. But in the other 28 economies listed in Figure 7.3, education expenditure is often more than twice that on health. Most governments in the region provide access to education but leave health care largely to private provision. Table 7.5 shows that in 14 of the 20 economies for which data are available, government expenditure on education as a percentage of GDP fell in 2010 compared with The unweighted average for these 20 was 4.4% of GDP in 2009, which fell to 4.0% in Economies with particularly sharp declines were Armenia ( 20%), Azerbaijan ( 12%), Kiribati ( 25%), the Maldives ( 25%), and the Republic of Korea ( 12%). Table 7.6 shows the same story repeated for health. As percentages of GDP, government health expenditures fell in 2010 in nine of the 19 economies for which data are available. Economies with large reductions were Armenia ( 16%), Azerbaijan ( 9%), Brunei Darussalam ( 9%), the Republic of Fiji ( 12%), Samoa ( 21%), and Sri Lanka ( 11%). In most economies, government expenditures on education and health both suffered as economies tried to reduce their fiscal deficits. Figure 7.3 Government Expenditure on Education and Health as a Percentage of GDP, 2010 or Latest Year Timor-Leste Kiribati Maldives Bhutan Mongolia Cook Islands New Zealand Tajikistan Samoa Vanuatu Thailand Japan Brunei Darussalam Tonga Fiji, Rep. of Singapore Kyrgyz Republic China, People's Rep. of Georgia Azerbaijan Armenia Philippines Papua New Guinea Taipei,China Bangladesh Sri Lanka Cambodia Sources: Tables 7.5 and Education Health REGIONAL TABLES

3 266 GOVERNMENT AND GOVERNANCE How corruption was perceived in The Corruption Perceptions Index is compiled by Transparency International (TI). TI uses this Index to rank countries according to how the degree of corruption is perceived among public officials and politicians. Corruption is defined as the abuse of entrusted power for private gain. Typical examples might include payments to obtain import permits, move up waiting lists, reduce tax liabilities, or obtain government contracts. Evaluating the extent of corruption in countries/ territories is based on two groups of respondents: country experts both resident and nonresident, and business leaders. Survey methodology, coverage, and respondents vary from country to country and over time. Hence, temporal and spatial comparisons are severely limited. Thirty-nine Asia and the Pacific economies are shown in Box 7.1 arranged in three groups according to their Corruption Perceptions Index ranks in 2010 out of a total of 178 economies worldwide. Asia and the Pacific contains three economies in the top 10 (highly clean) worldwide, namely, New Zealand (1), Singapore (1) and (8); while four economies are in the bottom 10 (highly corrupt), namely, Afghanistan (176), Myanmar (176), Turkmenistan (172), and Uzbekistan (172). Corruption and income appear to be positively correlated. Figure 7.4 plots the Corruption Perceptions Index against GDP per capita converted to international dollars using purchasing power parity (PPP). The regression line shows a high correlation between corruption and income levels. The causation may be in either direction: economies may have higher per capita GDP because they are less corrupt; or poverty may be the cause of corruption as poorly paid officials come under pressure to supplement their incomes by demanding bribes; or other factors are present that are associated with income and governance. Figure 7.4 GDP per Capita against Corruption Perceptions Index, 2010 GDP per Capita ($PPP) 60,000 50,000 40,000 30,000 20,000 10,000 0 R² = Lao PDR Taipei,China China, People s Rep. of Corruption Perceptions Index Sources: Tables 7.9 and 2.2. Singapore Brunei Darussalam Japan Encouraging investors: a mixed record but getting better. Table 7.8 shows that the costs and time taken to register a new business vary enormously within the region. In 2010, the days needed for registration ranged from 1 day in New Zealand, 2 in, and 3 in Georgia and Singapore; to 83 days in Timor-Leste, 85 in Cambodia, 100 in the Lao People s Democratic Republic, and 105 days in Brunei Darussalam. Lengthy registration procedures are a disincentive to setting up a new business and also provide opportunities for extorting bribes. Box 7.1 Corruption Perceptions Index Ranking of Economies in Asia and the Pacific, 2010 (total of 178 economies worldwide) Top One-Third Middle One-Third Bottom One-Third Singapore 1 Samoa 62 Armenia 123 New Zealand 1 Georgia 68 Timor-Leste Vanuatu 73 Azerbaijan China, People s Republic of 78 Bangladesh 134 Japan 17 Thailand 78 Philippines 134 Taipei,China Pakistan 143 Bhutan 36 Sri Lanka 91 Maldives 143 Brunei Darussalam 38 Tonga Korea, Republic of 39 Kazakhstan 105 Tajikistan Indonesia 110 Cambodia 154 Mongolia 116 Lao People s Democratic Republic 154 Viet Nam 116 Papua New Guinea 154 Kyrgyz Republic 164 Turkmenistan 172 Uzbekistan 172 Afghanistan 176 Myanmar 176 Source: Transparency International (2011).

4 GOVERNMENT AND GOVERNANCE 267 Figure 7.5 compares the number of days needed to register a new business in 2010 with that in Overall, the picture is encouraging. Out of 42 economies, two (the PRC and the Lao People s Democratic Republic) reported (quite small) increases in the number of days needed for registration between 2006 and 2010, 13 recorded no change since 2006, but more than half 27 economies reported reductions. Ten of these managed to more than halve the number of days required, and eight economies brought the period down to less than 20 days. These included economies as diverse as Bangladesh; Samoa; and Taipei,China. On the other hand, some economies have made substantial reductions in relative terms but still have long registration delays. Examples are Sri Lanka (where 35 days are still needed to register), Bhutan (46), the Philippines (38), and Indonesia (47). Several economies that have made no reduction since 2006 already had quite short registration periods while other economies that have made no reduction in lengthy registration procedures since 2006 include Vanuatu (39 days), the Republic of Fiji (46), Papua New Guinea (51), and Solomon Islands (57). Figure 7.5 Number of Days Required to Register a Business, 2006 and 2010 Brunei Darussalam Lao PDR Cambodia Timor-Leste Solomon Islands Papua New Guinea Indonesia Bhutan Fiji, Rep. of Viet Nam Vanuatu China, People's Rep. of Philippines Sri Lanka Thailand Palau Tajikistan Tonga Japan Kiribati Pakistan Bangladesh Kazakhstan Marshall Islands Micronesia, Fed. States of Armenia Taipei,China Uzbekistan Mongolia Kyrgyz Republic Maldives Samoa Azerbaijan Afghanistan Georgia Singapore New Zealand REGIONAL TABLES Source: Table 7.8. Data Issues and Comparability Data on government expenditures and revenue are mostly taken from country sources. The coverage of the budget data is not standard throughout the region. Data provided by many economies refer only to the central government, but in other economies they cover provincial and local governments. Most economies try to follow the International Monetary Fund s Statistics guidelines. Some economies are still using the 1986 version while others have switched to the 2001 Statistics guidelines. The statistics on the time and cost for registering new businesses and on perceived corruption are all taken from nonofficial sources. Common procedures are used in all economies and the researchers producing these data have refined their procedures over several successive surveys. However, because of the subjective nature of many of these data, they can only be used to give a broad idea of trends, levels, and rankings.

5 268 GOVERNMENT AND GOVERNANCE Table 7.1 Fiscal Balance a Afghanistan Armenia Azerbaijan Georgia Kazakhstan Kyrgyz Republic Pakistan Tajikistan Turkmenistan Uzbekistan China, People s Rep. of Mongolia Taipei,China Bangladesh Bhutan Maldives Sri Lanka Brunei Darussalam b Cambodia Indonesia Lao PDR Myanmar Philippines Singapore Thailand Viet Nam Cook Islands Fiji, Rep. of Kiribati Marshall Islands Micronesia, Fed. States of Palau Papua New Guinea Samoa Solomon Islands Timor-Leste c Tonga Tuvalu Vanuatu Japan New Zealand a Data refer to central government, except for Bangladesh, the People s Republic of China, Georgia, Kiribati, the Kyrgyz Republic, the Federated States of Micronesia, Pakistan, and Tajikistan, where data refer to consolidated government or general government. b Brunei Darussalam is a regional member of ADB, but it is not classified as a developing member. c GDP estimates refer to non-oil GDP. Before 2002, estimates include the value-added of United Nations activities.

6 GOVERNMENT AND GOVERNANCE 269 Table 7.2 Tax Revenue a Afghanistan Armenia Azerbaijan Georgia Kazakhstan Kyrgyz Republic Pakistan Tajikistan Turkmenistan Uzbekistan REGIONAL TABLES China, People s Rep. of Mongolia Taipei,China Bangladesh Bhutan Maldives Sri Lanka Brunei Darussalam b Cambodia Indonesia Lao PDR Myanmar Philippines Singapore Thailand Viet Nam Cook Islands Fiji, Rep. of Kiribati Marshall Islands Micronesia, Fed. States of Palau Papua New Guinea Samoa Solomon Islands Timor-Leste c Tonga Tuvalu Vanuatu Japan New Zealand a Data refer to central government, except for Bangladesh, the People s Republic of China, Georgia, Kiribati, the Kyrgyz Republic, the Federated States of Micronesia, Pakistan, and Tajikistan, where data refer to consolidated government or general government. b Brunei Darussalam is a regional member of ADB, but it is not classified as a developing member. c GDP estimates refer to non-oil GDP. Before 2002, estimates include the value-added of United Nations activities.

7 270 GOVERNMENT AND GOVERNANCE Table 7.3 Total Government Revenue a Afghanistan Armenia Azerbaijan Georgia Kazakhstan Kyrgyz Republic Pakistan Tajikistan Turkmenistan Uzbekistan China, People s Rep. of Mongolia Taipei,China Bangladesh Bhutan Maldives Sri Lanka Brunei Darussalam b Cambodia Indonesia Lao PDR Myanmar Philippines Singapore Thailand Viet Nam Cook Islands Fiji, Rep. of Kiribati Marshall Islands Micronesia, Fed. States of Palau Papua New Guinea Samoa Solomon Islands Timor-Leste c Tonga Tuvalu Vanuatu Japan New Zealand a Data refer to central government, except for Bangladesh, the People s Republic of China, Georgia, Kiribati, the Kyrgyz Republic, the Federated States of Micronesia, Pakistan, and Tajikistan, where data refer to consolidated government or general government. b Brunei Darussalam is a regional member of ADB, but it is not classified as a developing member. c GDP estimates refer to non-oil GDP. Before 2002, estimates include the value-added of United Nations activities.

8 GOVERNMENT AND GOVERNANCE 271 Table 7.4 Total Government Expenditure a Afghanistan Armenia Azerbaijan Georgia Kazakhstan Kyrgyz Republic Pakistan Tajikistan Turkmenistan Uzbekistan REGIONAL TABLES China, People s Rep. of Mongolia Taipei,China Bangladesh Bhutan Maldives Sri Lanka Brunei Darussalam b Cambodia Indonesia Lao PDR Myanmar Philippines Singapore Thailand Viet Nam Cook Islands Fiji, Rep. of Kiribati Marshall Islands Micronesia, Fed. States of Palau Papua New Guinea Samoa Solomon Islands Timor-Leste c Tonga Tuvalu Vanuatu Japan New Zealand a Data refer to central government, except for Bangladesh, the People s Republic of China, Georgia, Kiribati, the Kyrgyz Republic, the Federated States of Micronesia, Pakistan, and Tajikistan, where data refer to consolidated government or general government. b Brunei Darussalam is a regional member of ADB, but it is not classified as a developing member. c GDP estimates refer to non-oil GDP. Before 2002, estimates include the value-added of United Nations activities.

9 272 GOVERNMENT AND GOVERNANCE Table 7.5 Government Expenditure on Education a Afghanistan Armenia Azerbaijan Georgia Kazakhstan Kyrgyz Republic Pakistan Tajikistan Turkmenistan Uzbekistan China, People s Rep. of b Mongolia Taipei,China Bangladesh Bhutan Maldives Sri Lanka Brunei Darussalam c Cambodia Indonesia Lao PDR Myanmar Philippines Singapore Thailand Viet Nam Cook Islands Fiji, Rep. of Kiribati Marshall Islands Micronesia, Fed. States of Palau Papua New Guinea Samoa Solomon Islands Timor-Leste d Tonga Tuvalu Vanuatu Japan New Zealand a Data refer to central government, except for the People s Republic of China, Georgia, Japan, the Kyrgyz Republic, and Tajikistan, where data refer to consolidated government or general government. b Includes health. c Brunei Darussalam is a regional member of ADB, but it is not classified as a developing member. d GDP estimates refer to non-oil GDP. Before 2002, estimates include the value added of United Nations activities.