Prosperity with Inclusiveness, Growth with Sustainability: A Shared Aspiration for Development
Opening Address By
Haruhiko Kuroda
President
Asian Development Bank
At the 40th Annual Meeting Address to the Board of Governors
6 May 2007, 10:00 - 11:45 a.m.
Kyoto International Convention Center, Japan
I. Introduction
Your Excellencies, distinguished guests, ladies and gentlemen:
I am delighted to join the Chairman, the Honorable Koji Omi, Minister of Finance of Japan, in welcoming you to the 40th Annual Meeting of the Board of Governors of the Asian Development Bank.
We are honored by the presence of the Honorable Keiji Yamada, Governor of Kyoto Prefecture, at our gathering this morning. I would also like to extend a warm welcome to our new member countries, Georgia and Ireland. And thank you all for being here today.
It is fitting that we meet this week in Kyoto, a city that so gracefully blends the old Asia and the new; in Japan, the birthplace of Asia's reemergence in the world economy. I would like to take this opportunity to thank the Government of Japan for its continued commitment to Asia and ADB, the City of Kyoto for hosting us with excellent arrangements, and the people of Kyoto for warmly welcoming us to celebrate the 40th Annual Meeting of the Asian Development Bank.
II. Asia's Achievements and ADB's Role
Ladies and gentlemen:
In the closing session of ADB's inaugural meeting in November 1966, our first President,
Mr. Takeshi Watanabe, said:
"…The time has come to roll up our sleeves and prepare to cultivate this era of self-discipline.
From the seeds of this sacrifice will surely spring the fruits of economic prosperity."
ADB's founding fathers had a vision: to contribute to the acceleration of economic development in the developing member countries, collectively and individually. And in partnership with member countries in and outside the region, we at ADB have put that vision into action.
Let me take this opportunity to thank Governors from all our member countries for their ongoing support to ADB. Your cooperation is crucial now and in the future to continue our shared journey toward an Asia and the Pacific free of poverty.
These seeds planted 40 years ago have flourished, bringing tremendous benefits to the people of Asia and the Pacific. Per capita income in developing Asia, in real terms, has grown from less than $170 in 1967 to over $1,000 in 2005. During a similar period, average life expectancy has risen from 53 years to more than 67. In 1990, more than one third of the region's people still lived in absolute poverty. Now, fewer than one in five.
These are truly impressive achievements. And we can be proud of the role ADB has played in Asia's success.
Together, we have funded infrastructure to connect people with jobs, provide electricity for homes and factories, and water for farms and families. We have helped build appropriate systems for public economic management, finance, and governance. We have invested in health, education, social services, and the environment to help the poorest in the region attain a better quality of life.
Today in Uzbekistan, disadvantaged schoolchildren are using modern textbooks at low cost through an innovative rental scheme developed by ADB. In Bhutan, electricity has transformed the lives of 20,000 rural families, giving them better access to job opportunities, health care, and education. In Afghanistan, ADB's assistance is helping extend mobile phone service to more than one million subscribers-a technology with the potential to revolutionize the lives of the poor.
III. Key Challenges Ahead
Despite impressive progress, we cannot be complacent. Increased inequality across the region, and within individual countries, threatens social cohesion and puts at risk the process of growth itself. As I noted last year in Hyderabad, ours is increasingly a region of two faces-the shining Asia of vitality and wealth, and its shadows, where desperate poverty persists.
As you recall, last year I commissioned a group of eminent persons to provide their insights on the region's future. I take this opportunity to extend my deep gratitude to the Eminent Persons Group for its thoughtful report.
The vision of Asia as articulated in the report is one I share-the vision of an Asia and the Pacific fundamentally transformed. An Asia and the Pacific with new challenges to tackle-no longer arising from pervasive poverty, but instead from economic success.
To achieve that vision, however, we must ensure that Asia's future development is development that benefits all. In my mind, there are two fundamental principles that should guide us in our shared aspiration for development: prosperity with inclusiveness-and growth with sustainability.
Prosperity with Inclusiveness
Prosperity with inclusiveness means reaching out to the 620 million Asians who still live on less than $1 a day, and indeed raising the bar to encompass the 1.9 billion who have less than $2 a day. This will require sustained growth-broad-based growth that generates jobs and raises incomes by absorbing the surplus labor of the poor.
To create jobs for the hundreds of millions of unemployed and underemployed Asian people, governments must create an environment that nurtures the growth of the private sector-an environment characterized by macroeconomic stability; sound institutional, legal, and regulatory frameworks; good governance and rule of law; and well-functioning financial and capital markets.
Prosperity with inclusiveness also requires modern, reliable, and well-managed infrastructure-both the hardware and the associated software-to lay the foundation for inclusive growth, support private sector development, and provide better access to job opportunities for the poor. We see this in Savannakhet Province of the Lao People's Democratic Republic, where improved infrastructure and connectivity under ADB's Greater Mekong Subregion program helped boost investment and employment opportunities. In the process, the incidence of poverty in the province has been reduced by more than one third in recent years.
And prosperity with inclusiveness requires investment in human and social development to reduce disparities and expand the circle of opportunity to the poor. These widening disparities are associated with telling social disadvantages. In some Asian countries, technological centers of excellence coexist with primary and secondary schools with dismal literacy attainments. The region today has more girls out of primary school, more tuberculosis deaths, and more people without access to clean water than sub-Saharan Africa, Latin America, and the Caribbean combined.
Quite obviously, to address problems of exclusion, we will need to focus more intensely on enhancing the capabilities of the poor. Providing access to health, education, and social safety nets is not only the right thing to do-it's also the smart thing to do. It is the only way to give poor people the tools they need to effectively participate in, and benefit from, the process of economic development.
Growth with Sustainability
To achieve prosperity that benefits all, we must use our natural resources wisely so that the poor do not bear the brunt of the environmental impacts of growth. We must begin to take seriously the concept of growth with sustainability.
Over the last three decades, Asia's energy consumption has grown by 230%, and it is expected to double again by 2030. As a result, Asia now accounts for nearly one quarter of the world's greenhouse gas emissions-the leading cause of climate change. As the environmental balance worsens further, the poor are the hardest hit-losing health and income to intense floods, droughts, rising sea levels, and increased heat-related and infectious diseases.
Asia needs energy-to fuel industrial growth, to support its burgeoning megacities, and to spread production and income opportunities into rural and remote regions. But growth with sustainability demands cleaner technologies, new alternative energy sources, and more efficient energy use. It demands new mechanisms-such as ADB's Carbon Market Initiative-to help Asian economies develop by capturing the benefits of the $30 billion-a-year global carbon market. These efforts will benefit not only Asia but also the entire world by mitigating climate change and easing pressure on global energy supplies.
Growth with sustainability also means halting inefficient irrigation practices, deforestation, soil pollution, and other forms of land mismanagement that rob the poor of their livelihoods. It means better urban planning, and incentives to curb the release of air and water pollutants from cars and factories.
Above all, it means seeing our environmental responsibilities not as a cost, but as an investment in the future. As the impacts of climate change and environmental degradation reverberate across the world, they can only be tackled in partnership. Here in this building, where world leaders adopted the Kyoto Protocol 10 years ago, let us commit to work together as a true global community, to share development experiences, to collectively shoulder the burden, and to create a cleaner and more sustainable future for all.
IV. ADB in Action
Ladies and gentlemen:
A dramatically transformed Asia will also require an equally transformed development partner in ADB. Our challenge will be to define how we will make that transition.
Our process of change has already begun through our Medium-Term Strategy, MTS II. And we will be deepening our work on this very important issue as we review our Long-Term Strategic Framework, a process I initiated soon after receiving the report of the Eminent Persons Group.
It is clear, however, that ADB has unique strengths that can be put to use now, and in the future, to help create prosperity with inclusiveness and growth with sustainability. Let me touch on three key areas.
Regional Cooperation and Integration
First, many of Asia's issues need to be tackled at a regional level. Through greater cooperation, economies affected by the financial crisis of 10 years ago have emerged stronger, with new tools to prevent such a crisis from recurring. Subregions across Asia and the Pacific are integrating their borders and sharing resources, including energy, to create a win-win situation for all.
The successful conclusion of the Second East Asia Summit last January sent a powerful message about the heightened desire of Asia's leaders to bring the vision of a vibrant, Pan-Asian economic community to fruition. Thus, ADB will continue to provide finance, capacity development, and expertise to facilitate and intensify regional cooperation and integration. This, in turn, will promote economic convergence at higher rates of growth, and provide a means to collectively tackle environmental threats, natural disasters, communicable diseases, and other crises that defy national borders.
I want to convey my appreciation to our shareholders for their support of our Regional Cooperation and Integration Strategy, as well as the Facility to support it. The strategy calls for collaborative action on four mutually reinforcing pillars: cross-border physical connectivity, trade and investment, money and finance, and the provision of regional public goods.
I am confident that accelerating regional cooperation and integration will profoundly change the region's social and economic landscape for the better, heralding a new era of hope and prosperity.
Mobilizing and Intermediating Financial Resources
Second, Asia's future development requires new approaches to mobilizing and intermediating the region's large savings, as well as global investor funds, to sustain growth and attain the Millennium Development Goals. We now estimate infrastructure requirements alone for Asia and the Pacific to amount to more than $3 trillion over the next 10 years. We need to think seriously about ways to effectively use Asia's rapidly increasing savings to meet this huge infrastructure gap.
Developing the region's capital markets is a crucial area that ADB has long supported. In 2006, for example, we launched the $10 billion Asian Currency Note Program, an innovative tool that provides a single unified platform for bond issuers in the region, setting an important milestone for deepening and integrating the region's bond markets.
Equally important is to bring together the right partners at the right time to invest funds, enhance public-private partnerships, share risks, and mutually reap the benefits of higher levels of synergy. We need to make the greatest impact possible with limited resources. For example, in the last two years, through our Multitranche Financing Facility, we made available an amount of $5.3 billion, which can be drawn upon for investment as needed. In the following four-year period, ending with 2010, we expect to make available an additional $12 billion as we bring other partners on board.
Under our new Financing Partnership Strategy, we will deepen partnerships for investment with our official development partners and the private sector while rationalizing, harmonizing, and simplifying multipartner projects. Our Water Financing Program for 2006 to 2010, for example, will double our water investments to, among others, provide safe drinking water and improved sanitation for about 200 million people. Our Clean Energy Financing Partnership Facility will mobilize funds to increase clean energy projects in our developing member countries.
In this regard, I thank the Government of Japan for its initiative to enhance sustainable development in Asia, under which it will contribute to our Clean Energy and Regional Cooperation Facilities. We also welcome the enhanced cooperation between Japan Bank for International Cooperation and ADB. And we are encouraged that others are considering participation in these and other multipartner initiatives, such as the recently launched Asia Pacific Carbon Fund.
In addition to these endeavors, an adequate and steady flow of concessional funding through the Asian Development Fund remains essential. I look forward to the forthcoming ADF X discussions and your commitment to help scale up the fight against poverty with renewed zeal.
Creating and Disseminating Knowledge
Finally, access to knowledge is critical to economic and social development. Knowledge is the foundation of productivity and competitiveness-and the backbone of good public policy.
As a knowledge institution, we will continue to apply our deep and broad experience to each country's specific challenges, sharing the region's development successes more effectively so that we can achieve development for all. Our regular knowledge products such as the Asian Development Outlook and Asia Bond Monitor, as well as special studies on issues such as regional integration, labor markets, and ASEAN+3 initiatives, can help shape the region's response to its coming challenges. Our Phnom Penh Plan for Development Management provides high-quality learning programs for about 300 middle- and senior-level civil servants in the six Mekong countries each year, thus promoting improved public sector management in these countries.
Our knowledge networks, supported by hubs of excellence, will help build capacity across developing Asia and the Pacific to tackle future challenges. We have established knowledge hubs on growth and development at our own ADB Institute in Tokyo; on clean energy at The Energy and Resources Institute in New Delhi; on climate change at Beijing's Tsinghua University; on public finance at the Center for Public Finance and Regional Economic Cooperation in Manila; and on the 3R's-reduce, reuse, recycle-at the Asian Institute of Technology in Bangkok.
We have also established communities of practice on important topics, including governance, gender and the environment, to more effectively share and manage knowledge. We are working vigorously to mainstream our expanded knowledge base into all our operational activities for attaining higher overall efficiency, greater development effectiveness, and increased results orientation.
V. Concluding Remarks
Ladies and gentlemen:
If the past 40 years have taught us anything, it is that the people of Asia and the Pacific have an indomitable spirit and the will to rise to untold challenges. With the support of development partners around the world, developing Asian countries have learned from each other; they have shared their successes, and established a place of pride for the region in the world economy.
As we turn now to the challenges ahead, let us keep our shared aspiration for development squarely in our sights. By focusing on inclusive and sustainable development, we will together create an abundance of opportunity in this vast, resilient, and proud Asia and Pacific region, with the benefits of prosperity shared by all.
Thank you.
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