Catalog

Changing Times

By David Kruger (dkruger@adb.org)
External Relations Specialist

"The Real Challenge We face is that ADB can't address everything with each project, How do we proceed ...without making each project impossible to manage?"

Background

After 9 years on the Board of Directors of the Asian Development Bank (ADB), including 3 years as Dean of the Board, Executive Director Julian Payne, of Canada, retired on 31 July 2003. His time at ADB coincided with several major changes in Asia and at the Bank. He continues to reside in the Philippines, traveling and working in the field of international development. He spoke with David Kruger. Excerpts:

You have been at ADB through some interesting times—the last years of the Asian miracle, the financial crisis, the burst of the high-tech bubble, September 11, and the outbreak of severe acute respiratory syndrome (SARS). How has development in Asia changed over this period?

Well, the economic development of the region has been a bit like a roller coaster but I believe the trend line is obviously up. I came in 1994 and that was a time of euphoria, a time of tremendous optimism and high expectations.

In retrospect, it was a time of overoptimism and overly high expectations that. CHANGING TIMES couldn’t be sustained. The financial crisis in 1997 was dramatic in economic terms and would have been a potential disaster if it hadn’t been addressed quickly.

But it was also dramatic in the sense of requiring an adjustment in the psychology and the approach in the thinking about Asia. Ironically, what happened in the 1997 crisis has led to some real benefits.

We have seen some real reforms in the region in terms of floating exchange rates. We’ve seen countries in the region building up their reserves. We’ve seen countries beginning to institute reforms in public administration and in corporate governance. We have seen the Chiang Mai initiative in 2000 that could lead to revolutionary developments in regional stability arrangements in the future.

However, much remains to be done and that is the challenge we must continue to address. SARS has caught the headlines this year. While very serious and leading to short-term economic losses in some areas such as tourism, it will also lead to changes in and attention to health systems.

How did the financial crisis affect ADB and the way it does its business?

I think what the 1997 financial crisis did was show us that we had to continue to be involved in the banking and financial sectors in developing member countries and try even harder and consider Asia’s economic development in more realistic terms. We also had to recognize that ADB had a role in providing emergency financial assistance and monitoring the financial situation as ADB’s Regional Economic Monitoring Unit now does.

You mentioned a shift in thinking about how to approach development.

People have come to realize that development is a much more complex process than just economic growth, social development, or emergency relief. This is not new. What has become much more obvious in the past decade is the realization that the environment is really important. If you don’t have a sustainable environment, you will have a real constraint on economic growth itself.

The issue of gender is also a very difficult one. It is cultural. But if you are looking at poverty, the fact is that two thirds of the poor are women. We have to take into account the impact of projects on women if we are serious about tackling poverty.

There have been many other new dimensions, with perhaps the most important being governance. When I arrived at ADB, there was a huge debate as to whether ADB had the mandate to be involved in governance at all. Now it is accepted that good governance is essential with the debate being on how to do it effectively. All these new dimensions are important.

The real challenge we face is that ADB can’t address everything with each project. How do we proceed with this rather holistic approach to development without making each project impossible to manage? This is a challenge for the Board, for ADB, and for development.

"The most satisfying thing I've seen during my time at ADB is the more frank and open discussion about development issues"

How has ADB’s Poverty Reduction Strategy changed Asia and the way ADB does its work?

ADB’s Charter does not include one single reference to the word poverty. This had been a real issue and cause for much debate with the Board until very recently.

One of the great achievements of President Chino was to very early in his presidency make it clear that poverty reduction was the overarching goal of ADB, and should be taken into account in all ADB activities. This was a major step in the evolution of ADB.

Second, if you look at ADB now, there is not much debate about the need to focus on poverty reduction. The real issue is how effectively we’ve been able to implement this overarching goal. Here, we’re working to a certain extent in new territory. But in my view, this was probably the major policy step that took place during my time here at ADB. Related to this step is the very clear commitment that ADB has made to support and achieve the Millennium Development Goals in Asia. ADB was one of the first multilateral development banks to make an absolutely unambiguous and explicit commitment to the MDGs. I do not believe ADB has yet been fully recognized for its early commitment supporting the realization of the MDGs in Asian developing member countries.

Some people believe ADB should limit its work to a specific set of areas and not try to do everything. How do you view that idea?

There are practical limits to how much any institution can do and disperse its activities. Unless we assume that ADB can expand its professional staff without limit, it is not really possible to expect that it can do everything well. We need a minimum expertise and critical mass to do things well. If ADB wants to be in health, for example, it cannot have just one or two health professionals at headquarters.

The second issue is efficiency. In theory, we could have two dozen areas of activity at headquarters and two dozen areas of activity in every developing member country we work with. The question is whether this is an efficient way to do business. It is not reasonable in terms of the sheer efficiency of the operation or having enough resources to have any real impact in each sector. Whether ADB is in too many sectors as a whole is difficult to say. But there are tremendous pressures on the bank. Donors want ADB to address every new development challenge—SARS, HIV/ AIDS, money laundering, etc. Developing member countries are looking to get resources from wherever they can for their needs. Within the bank, professionals in each field want to be active in each country. All of these are pressing ADB to expand and diversify its activities.

Somebody has to sit back and say, “How far can we go before we begin to lose impact, and we become inefficient and mediocre in everything everywhere?” That’s a big issue for ADB and the Board to address.

As you look back, what areas of your work have been most satisfying?

The most satisfying thing I’ve seen during my time at ADB is the more frank and open discussion about development issues. ADB’s Policy on Confidentiality and Disclosure of Information—which was approved in 1994, shortly after I arrived here—was a dramatic change. Coupled with the Internet and the web site, it opened up ADB to the public. This was significant because ADB is not well known outside of Asia. In parallel, the series of policy papers starting with governance and subsequently anticorruption has opened up ADB’s discussion of development in areas that had been considered, until the mid-1990s, to be taboo. Finally, there has been the change in Board discussions. Over the years, Board discussions have become much more focused, more explicit, and more businesslike. Board members say what they think.

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