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Benefits of High Growth Must Reach Poor in South Asia, Says ADB Vice-President

NEW DELHI, INDIA (16 September 2004) - The benefits of high sustainable growth must filter through to all parts of society in order to reduce South Asia's high poverty burden, Asian Development Bank Vice-President Geert van der Linden told journalists today in Delhi.

Speaking at the Foreign Correspondents' Club of South Asia, Mr. van der Linden said South Asia has been making progress in reducing poverty, but more needs to be done to accelerate progress.

"On the basis of a poverty line of $2 a day, which is no generous standard by any means, well over two-thirds of people in Bangladesh, India, Nepal, and Pakistan live in poverty," he said.

"It is clear that the struggle against poverty in Asia will be protracted. We have seen in other parts of Asia that this struggle can be won. Policy makers must focus on generating high rates of sustainable growth while ensuring that the benefits of that growth are spread to all parts of society."

South Asia is also the weakest performer in Asia in terms of reducing under-5 mortality and malnutrition among children, he said.

Other indicators, such as youth literacy have shown only slow progress, although primary school enrolments in India and Bangladesh have made significant strides. Meanwhile, the countries of South Asia spend much less per capita on services such as health than other countries in the region.

There are important lessons to be learned from the poverty reduction experiences of other parts of Asia, including the People's Republic of China and some Southeast Asian countries, he said.

"The lesson is that not only do high rates of economic growth generate economic opportunities for the poor, they also increase the resources that governments have at their disposal to invest directly in the poor," Mr. van der Linden said.

But he added that achieving high growth rates is not enough. "A given rate of growth will benefit the poor to a much larger degree in a relatively egalitarian society as compared to one in which inequality is high. Simply put, economic growth should not by-pass the poor.

"In South Asia, this means that governments should pay special attention to raising productivity in the agriculture sector as most of the poor depend on agriculture."

He said that industrial growth in East and South East Asia contributed much more to poverty reduction than in South Asia, as it created more employment.

Increasing investment in basic education and health care is also important in ensuring that the poor participate meaningfully in the country's growth, he said. "A lack of education and health care not only hurts the poor today, but also limits their ability to make the most of future opportunities created by economic growth."

ADB is dedicated to reducing poverty in the Asia and Pacific region through pro-poor sustainable economic growth, social development, and good governance. Established in 1966, it is owned by 63 members - 45 from the region. In 2003, it approved loans and technical assistance amounting to US$6.1 billion and US$177 million, respectively.

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