ABSTRACT
This chapter focuses on the fiscal policy measures for inclusive growth and their effects in Organisation for Economic Co-operation and Development (OECD) members. Advanced economies have a much longer history of using fiscal policy to promote inclusive growth than those in developing Asia. Addressing inequality has traditionally been one of the key strategic objectives of fiscal policy in the advanced economies which tend to use progressive taxation to redistribute resources from the rich to the poor via transfers and subsidies. Notwithstanding the larger size of the government and the higher priority accorded to income redistribution in advanced economies, at least some of their experience with using fiscal policy for equity-promoting purposes is relevant for developing Asia. The fiscal policies of OECD members with those of developing Asia are compared. The fiscal policies have a regressive effect in OECD members and on poverty reduction as well as the trade-off between equity and efficiency.
