"Small Governments, Big Ambitions: Fiscal Policy in East Asia and Pacific argues that, over the past three decades, most economies in the East Asia and Pacific region have followed a “growth-enabling†? approach to fiscal policy, taxing little and spending within their means, especially on infrastructure. Although this strategy has supported growth and macroeconomic stability—and has propelled much of the region to middle-income status—it also has led to underinvestment in education, health, social protection, and climate adaptation. Consequently, growth has slowed and become less resilient and less inclusive, putting the region’s high†‘income aspirations at risk.
To achieve its development ambitions, the region must forge a new, “growth-enhancing†? fiscal compact. The state will need to play a stronger role in boosting human capital and upgrading infrastructure to support the shift to more skill- and technology-intensive growth. It must also protect people and the economy from shocks in a region that is rap
