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p. 7 of 14 BACK | NEXT Preface Emerging Asia: Challenges to Development The Strategic Agenda Core Strategic Areas of Intervention Crosscutting Strategic Themes Implementing the Strategy Resources for the Strategy Next Steps

The Long-term Strategic Framework of The Asian Development Bank (2001-2015) : The Strategic Agenda

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Core Strategic Areas of Intervention

Sustainable Economic Growth

Poverty reduction, as ADB’s overarching objective, defines the basic direction of ADB’s role and strategy in the region. Each DMC’s level of development and strategy for addressing poverty will determine ADB’s role in most effectively reducing poverty. The region is extremely diverse, and ADB’s borrowing member countries range from some of the poorest in the world to those with middle-income economies. The country strategy and program (CSP) that ADB will adopt to promote growth and development in each country will be based on a poverty assessment and will be tailored and prioritized to the particular circumstances and needs of that economy. The CSP will address the ways in which ADB can contribute most effectively to achieving the IDGs. IDG targets for each country will be reflected in partnership agreements signed with each DMC and in the respective CSPs. Sustainable per capita growth rates—3.5 percent to 4.0 percent in Southeast Asia and 5 to 6 percent in South Asia—are essential for achieving the IDGs; they will remain essential to make significant gains in poverty reduction, to address diverse problems of underdevelopment, and more generally to improve the quality of life. Particular attention will be given to ensuring the environmental sustainability of growth and to helping reverse the environmental degradation that has taken place across the region.

Building and upgrading both physical and social infrastructure throughout the developing Asia and Pacific region is a precondition for sustained growth and requires substantial investment. Extensive unfulfilled demand exists across the region, ranging from basic infrastructure needs in the poorest economies to requirements for sophisticated infrastructure, services, and skills in the more advanced DMCs. This demand will remain substantial over the next 15 years and will require significant resources and large investments.

Public investment will continue to be important in the provision of physical infrastructure, despite the rapidly expanding role of private capital and markets. Many key development areas—all too often those where poverty is most persistent—are perceived by private investors and capital markets as entailing high risks and low financial returns; such areas simply do not attract private investment. The role of the private sector must be supplemented and complemented by that of government in the provision of infrastructure. Because of the fragility of the region’s capital markets, ADB has a role in helping DMCs mitigate high sovereign risk and obtain capital to finance development. Hence, ADB will retain its traditional role of providing finance for public investment in infrastructure. As economies, capital markets, and financial institutions and instruments develop and diversify in the region, ADB will take an increasingly catalytic role in mobilizing private sector resources and in facilitating public-private partnerships in the provision of infrastructure.

Growth that results in widening and pervasive inequalities in income and wealth is neither desirable nor sustainable. Equitable access by all to assets and opportunities and a stake in the outcome are essential factors in transforming growth to development and addressing problems of poverty in the region. Development must be inclusive: its benefits will have to reach all key groups that make up the poor in the region, including in particular women and children; minority groups; the extreme poor in rural areas; the growing numbers of urban poor; and those pushed below the poverty line by natural and man-made disasters.

An important dimension of inclusive development—and a key area of focus for ADB—involves strengthening the participation of all those affected directly and indirectly by ADB’s interventions, beginning at the design stage, in order to ensure that such programs are relevant and feasible. Building the capacity for participation, including participation at the local community level, will be an important element of ADB’s promotion of good governance.

Large investments will be required in the social sectors and in social infrastructure, particularly education, health, shelter, and water supply and sanitation, especially in the poorer countries. These investments in areas such as education and health are essential for sustained growth and productivity, as well as for promoting human development and improving the quality of life. A key part of ADB’s activities will involve extending the availability of efficient social services, particularly education, to the poor and women. The nature of the required social infrastructure will evolve in response to factors such as changing demographics and technology. For example, in the case of education, basic coverage will remain a continuing challenge in many DMCs: providing the minimum foundation while the proportion of the young remains high and larger numbers of people move toward working age. On the other hand, the challenges of globalization, accelerating industrialization, and rapidly evolving information and communications technology will call for investment in major changes in education systems and curricula to raise levels of technical knowledge and skills.

To maximize the benefits of growth, ADB will focus its resources where the impact on poverty is likely to be greatest. Rural development will remain an important focus of ADB support: the majority of the region’s poor are likely to continue to reside in rural areas over the next 15 years, and agriculture and agro-industry will continue to be important to the region’s growth⁸

New infrastructure needs are also emerging. The region’s rapid growth, coupled with a growing population and increased rural-urban migration, is resulting in extensive urbanization and increasingly congested and polluted cities. This, in turn, is resulting in deteriorating living conditions and quality of life for large numbers of residents. ADB’s role in the provision of urban infrastructure, especially to serve the new urban poor and disadvantaged groups, will be an important priority in the next 15 years. Similarly, ADB is committed to supporting information and communications technology to promote development and close the gap between the “information rich” and “information poor”. Increased access to information will allow the less privileged in society, and less developed parts of the region, to gain wider options and to play a greater role in determining their future.

Inclusive Social Development

Accompanying growth must be a comprehensive program for social development that puts people first and empowers the weaker groups in society to gain access to assets and opportunities. The scale of the challenge is reflected in the continuing weak social indicators in many countries, particularly for women and girl children, who make up a disproportionate share of the poor, and whose condition is reflected in indicators such as high infant and maternal mortality rates and low access to social services. ADB will support efforts toward equity and empowerment through addressing each of these concerns explicitly in its programs and in the design and implementation of its projects.

Social support programs must respond to long-term challenges such as the needs of the poor, the aged, and the otherwise disadvantaged, as well as to crisis-induced conditions. The 1997 Asian crisis showed how quickly economic and financial shocks can reverse gains made in poverty reduction through many years of rapid and sustained growth. Large numbers of people fell into poverty as a result of the crisis, with no social safety mechanisms in place to respond to their particular needs. A fundamental challenge for the countries of the region is to establish effective social support programs. Such programs are needed to address crisis-induced requirements and longer-term (e.g., demographically based) needs, ensure equity in development, and maintain the social cohesion necessary for continued growth. ADB will support the countries of the region in developing and implementing efficient and effective social support programs.

ADB will promote efficient and equitable social development through specific and focused projects and support for policy and reform programs. Such initiatives will include ensuring adequate budgetary allocations for human development, targeting basic social services to the poor, reducing gender discrimination in all development efforts, and promoting the development of social capital. Advocating sound population policies will help address the problems resulting from large populations and high population growth. Encouraging civil society to participate in social development programs to ensure widespread support will also contribute to social development.

Governance for Effective Policies and Institutions

Poor governance constrains, retards, and distorts the general process of development, and has a disproportionate impact on the poorer and weaker sections of society. The most vulnerable victims of inefficient and inadequate social sector spending and poorly designed social development programs are the poor. Inaccessible, unpredictable, and inefficient legal systems that lack transparency also discriminate disproportionately against the poor. Similarly, corruption (a clear symptom of bad governance) often affects the weakest groups in society the most. More generally, the 1997 Asian crisis underscored the dangers of poor governance in both the public and private sectors, and highlighted the increasing importance of effective government regulation of business and financial activity at a time of growing private sector participation in the development process.

DMCs and ADB recognize the essential role of governance in the development process—including (at a minimum) efficient, effective, and responsive government at all levels. More broadly, governance correlates closely with equitable and inclusive growth and with the spread of economic freedoms and rights. To improve governance, it is necessary to empower communities, individuals, and groups so that they can participate more actively in decisions that affect their lives and interests. Governance is also important for the efficient functioning of the private sector, both through the creation of the necessary conditions for efficient markets and through effective corporate governance. In particular, good governance of financial markets is crucial to the process.

ADB will focus on promoting good governance in partnership with the DMCs, and allowing for the diversity of DMC circumstances and requirements. As part of its agenda for promoting good governance, ADB has developed a medium-term action plan: this plan includes programs to be developed with individual DMCs, and regional initiatives that will focus on governance issues common to the region or to groups of DMCs⁹. Four elements of good governance define the focus and direction of ADB’s initiatives in this area: accountability, participation, predictability, and transparency. Consistent with these four elements, ADB will undertake, at individual country and regional levels, a wide range of activities relating to core government functions and public sector management, such as public expenditure management and public administration reform. ADB will also address other key areas, such as legal system reform; improving public accountability; strengthening the framework for corporate governance; improving governance at the subnational level; and improving service delivery, particularly for the poor.

The trend toward greater decentralization of government services and participation by stakeholders has increased the need for building capacity and strengthening institutions at the subnational levels, including provinces, states, municipalities, and local communities. This is essential if decentralization is to achieve its desired purpose of greater public efficiency and more inclusive development. A core element of ADB’s governance-related activities will be enhancing institutional capacity and capability, including government and public institutions at the national as well as subnational levels, such as provincial and municipal administration, local institutions, and community-based organizations.

One important area where ADB has developed considerable expertise is the governance of the region’s rapidly growing cities and municipalities. With continuing population pressures on urban areas, the development and administration of the necessary urban physical and social infrastructure are essential to maintain an acceptable quality of life, maintain social harmony, and address the needs of the rapidly growing numbers of urban poor. The expertise ADB has developed in dealing with governance issues for urban development will be broadened and applied to addressing problems in all sectors.

Capacity building will be a key focus of ADB’s general country assistance strategies, and will be built into specific ADB initiatives in all DMCs. This emphasis will include ADB’s support for the involvement of nongovernment organizations (NGOs) and community-based organizations in the design and implementation of projects and programs and the delivery of social services. Strengthening the participation of stakeholders in the development process will improve efficiency in the implementation of ADB interventions.

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