Regions and Countries

	Table of Contents
p. 1 of 9 BACK | NEXT Executive Summary I. Introduction II. Current Development Trends and Issues III. Pacific DMC Development Strategies IV. ADB's Development Experience V. ADB's Strategy VI. Delivering the Pacific Strategy VII. Risks and Performance Monitoring and Evaluation Appendixes

Responding to the Priorities of the Poor: A Pacific Strategy for the Asian Development Bank 2005-2009

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Executive Summary

The Pacific Strategy 2005–2009 provides a framework for the operations of the Asian Development Bank (ADB) in its 14 Pacific developing member countries (PDMCs) and for ADB support to Pacific regional cooperation. Detailed strategies and programs will continue to be developed at the country level, in support of the PDMCs’ national development programs. The Pacific Strategy highlights differences among PDMCs, but also addresses common challenges.

This is an important juncture for the Pacific. The development performance of the PDMCs over the past decade has been mixed. Four PDMCs have achieved per capita economic growth at or near 3% since 1995, but six have suffered a contraction in per capita income during the period, and in four of these cases economic performance has been sharply negative. Social indicators are also distinctly mixed, with some PDMCs on track to achieve the Millennium Development Goals, while others are not making significant progress. Poverty is a growing concern in many PDMCs.

All PDMCs face significant challenges in generating broad-based and sustained economic growth from small, high-cost, and narrowly focused economies. While there are success stories in some countries and sectors, in general the private sector has been unable to lead economic growth. Job creation for rapidly growing populations has been minimal. ADB governance and private sector assessments highlight the fact that natural constraints are exacerbated by a policy and institutional environment that is highly unfriendly to business and that focuses more on resource distribution than economic growth.

A key governance challenge in the Pacific is for leaders and communities to promote the national interest through modern governance systems within small societies in which traditional family and clan obligations remain very important. Governance assessments highlight that in some countries, quality of leadership, corruption, accountability and transparency of government, and participation in development programs and ownership by the people are key issues. Concerns about these issues are widespread in many PDMCs, but progress has been made in some areas. The inability of PDMCs to build and retain capacity for vital functions, such as policy formulation and public financial management, is a key constraint.

In short, while natural constraints are real, the quality of policies and institutions is vital to the economic growth, social development, and poverty reduction prospects of the PDMCs. It is here that ADB should focus its attention. Even in the smallest and most resource-poor PDMCs there are opportunities to use existing, limited resources more efficiently and effectively.

Regional cooperation also has significant potential for mitigating the constraints of capacity and scale encountered in the Pacific. However, PDMCs have historically been unwilling to fully capitalize on this potential. The recent commitment of Pacific leaders to the development of a “Pacific Plan” may reinvigorate regional cooperation.

ADB’s focus over the past decade has been on economic management, governance, and public sector reforms, and on supporting the development of key infrastructure. Lending volumes have been modest. Technical assistance (TA) has been a major demand from PDMCs. ADB portfolio performance has been uneven. Participation and local ownership have been key ingredients for success, especially in sustaining reforms. More broadly, PDMCs and development partners alike must reappraise their roles in creating the conditions for broad-based, private sector-led economic growth. Supportive rhetoric has not yet been translated into a conducive environment for business.

The goals of the Pacific Strategy 2005–2009 respond to the priorities of the poor of the Pacific, as expressed through ADB’s participatory poverty assessments: (i) opportunities to earn cash income and (ii) better access to basic social services. Strategic objectives and key result areas (KRAs) have been developed in response to these goals, lessons learned from recent experience and analytic work, and the assessment that improved governance, policies, and institutions are central challenges in the Pacific. Objectives and KRAs are consistent with ADB’s Poverty Reduction Strategy and commitment to the Millennium Development Goals. With limited staff and other resources, and given the important role of other development partners, greater focus, selectivity and impact is sought, through the selection of the following strategic objectives and KRAs:

Strategic Objective 1: Support a Conducive Environment for Private Sector

Key Result Areas for ADB:

1. An effective institutional, legal, and regulatory environment
2. Improved financial services
3. Improved state-owned enterprise ownership arrangements, accountability, and performance
4. Improved provision, operation, and maintenance of physical infrastructure
5. Effective institutional framework for developing skills in response to labor market demands.

Strategic Objective 2: Enhance the Supply of, and Demand for, Quality Basic Social Services

Key Result Areas for ADB:

1. Social sector strategies that are relevant and responsive to national objectives and client’s needs
2. Effective public, private, and development partner resource allocations for social services
3. Capacity to manage and deliver quality social services.

Strategic Objective 3: Promote Effective Development Processes

Key Result Areas for ADB:

1. Increased community participation and ownership in development programs
2. Increased public demand for good governance, and for effective markets and services
3. Strengthened government transparency and accountability
4. Increased dialogue and cooperation among civil society organizations, private sector groups, and governments
5. Improved availability and dissemination of quality data and information on development issues
6. Gender and environmental considerations mainstreamed into development planning and programs
7. Strengthened capacity of PDMC governments, civil society, and private sector groups to plan and manage for development results
8. Enhanced development partner coordination and harmonization
9. Enhanced impact of regional cooperation.

The Pacific Strategy provides a mixture of continuity and new approaches in response to the mixed performance of the countries of the region. A strong focus on strengthening governance, as well as on effective management of the economy and public resources, will continue. Lending for key physical infrastructure will also continue where appropriate, often accompanied by TA on related policy and institutional issues.

ADB will significantly increase its engagement with PDMC governments, private sector groups and civil society organizations on the conditions required to generate domestic investment and private sector-led economic growth. This will require frank discussion of policy options and implications, sometimes addressing sensitive issues. PDMC leadership of the necessary reforms is essential.

The strategy's focus on the development process itself also brings new areas of emphasis. ADB will focus on broader participation and ownership, and will seek to build demand for good governance, effective markets, and services.

Under this new strategy, the nature of ADB’s engagement in the region will be qualitatively different. Discussing key development issues widely, on the basis of quality information, is an important objective. A communications strategy will be developed, to enhance ADB’s ability to promote its key messages. ADB’s new field offices will play a vital role. ADB will focus more narrowly on the KRAs, with a view to developing high-quality knowledge-based products and services in these areas, and managing for results to ensure development effectiveness.

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