Social Security and Economic Growth—Implications for East Asia

  • Frederick Zu-Liu Hu
Conference paper


A remarkable fact about the development experience in East Asia is that the size of government stays small throughout the region despite rapid industrialisation and phenomenal increases in living Standards. Government expenditures in East Asia averaged 22% of GDP in 1995, compared to 46% of GDP in OECD countries . A key factor behind the generally low levels of public spending in East Asia is that governments there have not played an active role in social protection activities such as old age provision and unemployment insurance. However, this Situation may change soon as pressures are being built up for increasing the state’s involvement in income redistribution and income maintenance. With fast declining fertility rates and rising life expectancy, East Asia will above all have to confront the challenge to meet old age pensions. While the percentage of the elderly (defined as people over 60 years old) in population is slightly under 10% in mid-1990s in the four newly industrialised economies — Hong Kong, Korea, Singapore and Taiwan — hence referred to as East Asian NIEs, for example, this ratio within a generation will rise to 22%, exceeding the 1995 level for OECD countries. How East Asian NIEs will respond to this challenge will have important implications for long-run growth and welfare.


Social Security Social Security System Seemingly Unrelated Regression East ASIA Initial Income 


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Copyright information

© Springer Japan 1998

Authors and Affiliations

  • Frederick Zu-Liu Hu
    • 1
  1. 1.Goldman, Sachs & CoHong Kong

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