The government of Laos has gradually increased its public spending on education and health during the last decade, aimed to eradicate poverty by 2020 and to reach the MDGs by 2015. The purpose of this thesis is to examine to what extent an increase in public spending on education and health benefits the poor. The Lao Expenditure and Consumption Survey from 2002-03 round (known as LECS III) and 2007-08 round (LECS IV) are employed in this analysis. The thesis begins with an overview of national and social development policies and examination of the pattern of public social spending and the progress of social outcomes. Then, the thesis reviews the analytical concept and literature of average and marginal benefit incidence analysis. In particular, two different methods of marginal benefit incidence of public education and health spending based on marginal odds of participation (MOP) and marginal behavioural response (MBR) are discussed and distinguished. The MBR approach combines two effects: (a) benefits received by new program participants and (b) additional benefits received by existing program participants. The MOP approach captures effect (a) alone. This thesis contains four analytical core chapters that examine the marginal benefit incidence of an expansion in public education and health programs. In the first core chapter, the marginal benefit incidence of an expansion in average participation of education and health programs is estimated using the MOP method and a cross-sectional household dataset. The next other two analytical core chapters use the MBR method to estimate the marginal incidence of public education and health spending using the panel dataset. The last analytical core chapter proposes a method for understanding the difference between, and compares the findings of, marginal incidence estimated from the MOP and MBR methods. Based on the MOP method, at the margin, the poorest quintile of the population receives a larger share of total benefits from an increase in the size of primary education and primary health care program than the richest quintile while the marginal rates of lower secondary school education and hospital health care programs are high for the richer quintiles. In contrast, the findings of marginal incidence using the MBR approach suggest the reverse conclusion compared to the findings based on MOP method. A strong effect (b) dominates the estimates of MBR, resulting in a pro-rich marginal incidence for all education and health programs. The different findings of marginal benefit incidence analysis derived from the MOP and MBR approaches depends on two factors: (i) The MOP method does not measure effect (a) correctly, because it ignores changes in program participation caused by factors other than an increase in public spending; (ii) MOP approach ignores effect (b). The results of this study show that in the case of Laos, an increase in public spending on education and health does not target the poor as well as is expected. Additional benefits received by existing program participants outweigh the benefits received by new program participants.

Developing Asia’s sustained rapid growth has improved general living standards and lifted hundreds of millions of Asians out of poverty within a generation. Yet the region now finds itself confronting rising inequality. Countries where inequality has worsened over the past 2 decades collectively account for over 80% of Asia’s population. As a result, governments across the region have begun to accord a higher priority to promoting more inclusive growth. The international experience, especially the experience of the advanced economies, suggests that fiscal policy can make a potent contribution to reducing inequality. This book systematically explores the relationship between both sides of fiscal policy—public spending as well as taxes and other fiscal revenues—and inequality in Asia at great depths. On the basis of the analysis, the book sets forth a number of concrete options for rendering fiscal policy a more effective tool for more inclusive growth that benefits all Asians. Inequality, Inclusive Growth, and Fiscal Policy in Asia is written in response to an issue of growing demand in most Asian countries, and it comes at a time when Asian governments are also beginning to use fiscal policy to bridge the glaring disparities between the rich and the poor of the region. As such, the book will be a highly valuable reference for researchers, policy makers, and students as well.

This paper provides a primer on benefit incidence analysis (BIA) for macroeconomists and a new data set on the benefit incidence of education and health spending covering 56 countries over 1960-2000, representing a significant improvement in quality and coverage over existing compilations. The paper demonstrates the usefulness of BIA in two dimensions. First, the paper finds, among other things, that overall education and health spending are poorly targeted; benefits from primary education and primary health care go disproportionately to the middle class, particularly in sub-Saharan Africa, HIPCs and transition economies; but targeting has improved in the 1990s. Second, simple measures of association show that countries with a more propoor incidence of education and health spending tend to have better education and health outcomes, good governance, high per capita income, and wider accessibility to information. The paper explores policy implications of these findings.

The effects of fiscal policy measures, both taxes and public spending, adopted by developing countries in response to the 2009 global crisis are still uncertain. This book discusses them using an analytical framework that allows for distilling possible implications on growth and social welfare.

The Asian Development Bank (ADB) has been continuously undertaking measures to enhance the effectiveness of its operations. To improve projects both at the preparation and implementation stages, ADB issued the Guidelines for Economic Analysis of Projects in 1997 as a means to enhancing project quality at entry. The conduct of proper economic analysis helps ensure the efficient use of development funds and public resources and thereby increase aid effectiveness. This practical guide is a supplement to the Guidelines for the Economic Analysis of Projects. It provides an overview of recent methodological developments in cost-benefit analysis as well as suggested improvements in the economic analysis of projects in selected sectors through case studies. These case studies illustrate the application of suggested methodologies, taking into account sector-specific needs, as well as difficulties faced by practitioners in terms of data and time constraints during project processing. It also aims to contribute to ADB’s capacity building initiatives as this will be the main reference material for conduct of economic analysis.