Gender and Development
ADB’s first policy on women in development was adopted in 1985. In 1998, ADB adopted a new Policy on Gender and Development. The shift from a “women in development” to a “gender and development” approach enables analysis of women in the context of their overall lives and their broader social relations. The gender and development approach recognizes that improving the status of women requires analysis of the relations between men and women and the cooperation of men. A gender-focused approach seeks to redress gender inequity through strategic, broad-based, and multifaceted solutions.
ADB’s Policy on Gender and Development looks at gender as a crosscutting issue with relevance to and influence on all economic, social, and political processes. Mainstreaming is adopted as the key strategy in promoting gender equity. The gender and development framework facilitates and enables ADB to incorporate gender concerns in all its programs and projects, including macroeconomic and sector studies.
Some of the mechanisms embodied in the policy are developing a gender and development action plan, increasing in-house capacity for addressing gender and development issues, enhancing gender capacity in ADB’s executing agencies, setting up a regional technical assistance to fund gender and development initiatives on a grant basis, creating a database and manual on best practices, and providing an external forum on gender and development.
In early 1999, the Board of Directors approved a regional technical assistance grant of US$1 million to ensure that ADB improves its performance in gender and development and strengthens gender and development capacity in its developing member countries. Six gender specialists were employed as part of this technical assistance grant.
(See also Improving the Status of Women; Social Dimensions of Development)
Good Governance
In 1995, ADB became the first multilateral development bank to have a board-approved policy on governance. The policy became the basic building block for a cluster of good governance policies, which now includes policies on procurement, law and policy reform, participation of civil society, and anticorruption. Also, good governance has since been established as one of the three pillars of ADB’s poverty reduction strategy.
The policy focused on dialogue with developing member countries (DMCs) to identify governance areas most suitable for ADB’s interventions, initiate activities that would increase the understanding of governance issues by DMC officials, and forge a broad constituency for good governance in the region through numerous, but ad hoc, regional activities.
(See also Office of the General Auditor; Policy Agenda; Poverty Reduction; and Private Sector Development)
Governance and Capacity Building
ADB’s policy on governance marks an important step toward promoting sound development management. Governance issues, which have increasingly moved to the forefront in recent development debates, are important in virtually all areas of development and form a cornerstone of ADB’s Poverty Reduction Strategy.
At the broadest level, governments perform vital functions: they make decisions and coordinate policies; they establish an enabling environment for private sector growth; they deliver certain critical sets of goods and services; and they promote equity. Several ADB studies and reports have also documented how the capacity of implementing agencies can have critical impact on the success of particular development projects and, ultimately, on a country’s overall course of development.
ADB’s governance work has aimed to advance a number of critical objectives, including transparency and predictability, accountability, strategic focus, efficiency and effectiveness, and participation. Virtually all of ADB’s technical assistance grants and the majority of ADB loans seek to integrate these principles into their design and implementation. ADB mainstreams these issues into the programs and project departments. Staff with expertise on core governance issues, such as civil service reform and public expenditure management, are being recruited. The projects departments will be responsible for sector specific governance operations and local governance.
ADB has also sought to develop its comparative advantage on critical governance issues. Because of the established relationship between ADB and its developing member countries (DMCs), as the regional multilateral development bank, ADB has had success in promoting reform and building capacity for public expenditure management; implementing legal systems reform; improving service delivery; strengthening public accountability mechanisms; improving governance at subnational levels; improving disclosure and transparency in the financial sector, corporate governance, and state-owned enterprises; and strengthening regulatory frameworks.
In 2000, ADB took stock of its activities in governance in the past few years, and designed a medium-term agenda and action plan for its operations in governance. The action plan aims to redirect ADB’s activities in governance away from ad hoc interventions toward more systematic and focused plans of action in each DMC, based on comprehensive assessments of the status of governance in each country. In this action plan, ADB will take a much more active presence at the regional level to raise the profile of governance and to provide a regional focal point for governance issues. ADB will also actively seek to demonstrate to its DMCs the costs of corruption and promote the spread of practical anticorruption initiatives within the region. Finally, an improvement in the existing coordination mechanisms on governance activities between ADB and other funding agencies is high on ADB’s agenda in the medium term.
Governance and Capacity Building Unit
(See Strategy and Policy Department; and Governance and Capacity Building)
Graduation Policy
As a broad-based multilateral development finance institution, ADB has an important role to play in facilitating the transition of developing member countries (DMCs) from depending on official concessional assistance to relying on private capital. With the approval of A Graduation Policy for ADB’s DMCs in December 1998, ADB now has in place a guiding framework for this transition process. The graduation policy encompasses changes in the terms, levels, and types of development assistance provided to DMCs as they progress across the development spectrum. The policy covers graduation of DMCs both from the Asian Development Fund (ADF) and from regular ADB assistance.
Under the policy, a DMC’s eligibility for or graduation from ADF is based on a decision matrix that is underpinned by two main country criteria: per capita gross national product (GNP) with the current threshold set at US$925 at 1997 prices, and debt repayment capacity for ordinary capital resources (OCR) borrowing. The former three-tier classification of borrowing DMCs has now been modified to a four-tier structure—groups A, B1, B2, and C. The policy also extends downstream to allow graduation from regular ADB assistance based on per capita GNP with the current threshold set at US$5,445 at 1997 prices, creditworthiness for commercial borrowing, and stage of development of economic and social institutions. Implementation of the policy framework has resulted in seven DMCs (Pakistan was already receiving an ADF-OCR blend) moving from ADF-only to the ADF-OCR blend, with the opportunity to avail of limited amounts of OCR, mainly for revenue-earning projects. Three DMCs have graduated from ADF borrowing and another four have formally graduated from regular ADB assistance. Periodic reviews of DMCs’ readiness for graduation are mandated under the policy.
Appropriate modifications have also been made in the operational guidelines for ceilings on ADB financing of project costs. In addition, new norms have been prescribed for government contribution to costs of technical assistance.
Greater Mekong Subregion
The Greater Mekong Subregion (GMS) comprises Cambodia, Lao People’s Democratic Republic, Myanmar, Thailand, Viet Nam, and Yunnan Province in the People’s Republic of China. In 1992, with the assistance of ADB, the six countries entered into a program of subregional economic cooperation designed to enhance their economic relations. The program has contributed to building hard and soft infrastructure so that the resource base can be developed and shared, and freer flow of goods and people in the subregion can be promoted. It has also led to the international recognition of the subregion as a growth area.
(See also East-West Economic Corridor; and Growth Area)
Growth Area
A growth area or subregional economic zone is a group of countries or areas within countries, viewed as an effective mechanism for promoting the efficient use of resources in the subregion. This is achieved by encouraging the flow of goods, services, capital, and labor across national boundaries. This promotes structural change and enhances economic growth as comparative advantages change in response to evolving differences among the subregions in terms of capital and human resources and receptivity to technological change and upgrading.
(See also Brunei-Darussalam-Indonesia-Malaysia-Philippines East ASEAN Growth Area; Greater Mekong Subregion; Indonesia-Malaysia-Thailand Growth Triangle; and Regional Cooperation)
Growth Project
A project is classified as a growth project if its primary aim is to promote economic growth through investments that increase economic production capacity and/or economic efficiency. Growth projects are designed to achieve the overarching objective of reducing poverty in each developing member country or incorporating project components targeted at poverty reduction.
Growth Triangles
Growth triangles are also known as subregional economic zones, natural economic territories, or extended metropolitan regions. They are transnational economic zones spread over well-defined geographically proximate areas covering three or more countries where differences in factor endowments are exploited to promote external trade and investment.
Unlike trading blocs, which require national changes in institutional and administrative arrangements, growth triangles usually involve only portions of countries. This reduces political and economic risks. Should a triangle succeed, its benefits can be easily extended to other parts of its member countries. Growth triangles are different from export processing zones (EPZs), which are well-demarcated enclaves outside a nation’s normal customs barriers, where foreign firms enjoy favored treatment for importing intermediate goods, taxation, and access to infrastructure. Like EPZs, growth triangles exploit the international mobility of capital and comparative advantage of low-cost labor.
A significant difference, however, is the involvement of more than one country. By exploiting economies of scale and integrating the resource endowments of their members, growth triangles can be far more competitive. Moreover, growth triangle activities are not limited to manufacturing, and may include service sector activities such as tourism and labor exports. On the other hand, the policy coordination required, especially for distributing benefits, is much more complex in growth triangles than in EPZs.
(See also Indonesia-Malaysia-Thailand Growth Triangle; and Regional Cooperation)
Growth-Oriented Project
A project is classified as a growth-oriented project if social or environment emphasis is a secondary aim.
Guarantee
A guarantee is a written undertaking by ADB, as guarantor, to pay a stated amount to a commercial bank if the borrower fails to meet certain commitments such as loan repayment. If an ADB guarantee covers part of debt servicing, but is triggered by any default, it is called a “partial credit guarantee.” If it covers a specific risk guarantee, namely, sovereign risk, it is called a “political risk guarantee.” In case of the latter, the guarantee is callable only if the default on debt servicing is because of the specific sovereign risks covered.
(See also Cofinancing; Credit Line; Export Credit; and Financial Management)
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