Innovations in public finance: A new fiscal paradigm for gender equality, climate adaptation, and care

By John McArthur – Director and Senior Fellow, Center for Sustainable Development

What is the future of fiscal policy in developing economies? How should the practicalities of public spending on climate adaptation be defined? What can the public sector do to promote the infrastructure and services needed to support a thriving formal care sector? Tackling any of these questions leads to consideration of deep systemic issues and uncertainties. Addressing their intersection in a manner that advances gender equality frames a defining challenge of our time.

The problems are conceptual, technical, and political. Core ideas and insights need to be updated to match humanity’s shifting frontiers, including its increasingly complex interface with the planet itself. Technical rigor is required to distill options, tradeoffs, and new paths forward. Political constraints abound, both within and across countries, as societies grapple with new and uncertain paradigms in the global economy and world affairs.

In the international policy context, it is worth remembering—on the heels of the recent Fourth International Conference on Financing for Development (FfD4) in Sevilla, Spain—the core principle of global partnership that launched a new spirit of cooperation in the original Monterrey Consensus back in 2002.¹ That first pivotal FfD outcome breathed life into the Millennium Development Goals and helped fuel a surge in “developed country” efforts to invest greater support for developing countries. But it was only made possible by a foundational premise, in paragraph six of the same Consensus, that, “Each country has primary responsibility for its own economic and social development, and the role of national policies and development strategies cannot be overemphasized.”²

Fast forward to 2025. Dramatic shifts across the global economy and development financing system leave little doubt that all countries have primary responsibility for their own development, even if many still face tremendous vulnerabilities, often due to forces beyond their direct control. While the near-term consequences of recent aid cutbacks have been devastating to many communities in many countries, some governments have quickly begun exploring the silver lining prompted by the impetus for domestic policy reforms. The world’s economic geography has changed dramatically too. At the time of Monterrey, there were 63 low-income countries (LICs), 92 middle-income countries (MICs), and 53 high-income countries (HICs), according to the World Bank.³ Today, the corresponding numbers are 26 LICs, 104 MICs, and 87 HICs.⁴ Simply put, more countries have more capacity to finance their own future.

At the same time, distinctions between developed and developing countries or income groups have become more porous. Challenges of setting fiscal policy, managing debt, adapting to climate change, building care infrastructure, and advancing gender equality are present at all income levels, even if the manifestations differ in each society, and deprivation challenges are typically most pronounced in lower–income settings. This is the essence of the so-called “universality” challenge of sustainable development—each country finding its own path to tackle interconnected issues that can underpin long-term societal success.

In a similar vein, the pursuit of gender equality needs to be embedded within a holistic view of each country’s public finance and macroeconomic policymaking. Climate finance, development finance, public finance, and social policies are all overlapping pieces of a common puzzle. Every economy might have its own unique mix of tax policies, fiscal rules, spending priorities, monetary issues, and debt management considerations, but the imperatives of equal opportunity for women and men apply universally to all of humanity.  

This compendium brings together a wide-ranging set of independent voices to consider a diverse yet interconnected set of economic policy challenges in this domain. It has a special focus on fiscal issues that influence inequalities between men and women and presents ideas on how countries can pursue taxation and public investment strategies that are effective in reducing disparities. 

This type of project is exactly why the Center for Sustainable Development exists—to offer frontier research, provide a knowledge hub, and catalyze networks for progress on the interconnected economic, social, and environmental challenges of our time. I hope readers enjoy approaching the topics from the authors’ diverse viewpoints, and that the compendium helps stimulate broader dialogue and debate toward shared progress for all.