About ADB

Poverty reduction, the new overarching goal of ADB

A new social policy agenda is emerging in Asia and the Pacific. Economic growth and investment in human development are in themselves not sufficient to eradicate poverty in the region. In response to this agenda, ADB's President announced that reducing poverty would become ADB's main goal; and in November 1999, ADB's new poverty reduction strategy was adopted.

The new strategy rests on three pillars:

1. pro-poor, sustainable economic growth based on policies and programs that facilitate employment and income generation for the poor;
2. social development, which can enable the poor to make full use of opportunities to improve their living standard, and programs that directly address the severity of poverty; and
3. good governance to ensure that the poor have better access to basic services and greater voice and participation in the decisions affecting them. The strategy requires that all ADB operations-lending, technical assistance, capacity building, economic and sector work, donor coordination, and policy dialogue-contribute to reducing poverty in each DMC.

Promoting pro-poor, sustainable economic growth

Growth is neither automatically pro-poor, nor by itself broad-based and inclusive. It must be made so. This requires that

1. equity in access to and use of production factors, such as land, capital, knowledge, labor, and other factor markets be addressed;
2. economic development that generates income and employment for the poor be promoted;
3. macroeconomic constraints that penalize the poor, such as inflation, tariffs, and prices, and national and external terms of trade policies, be tackled;
4. market-driven, effective private sector development that benefits the poor and free public resources for improving social development and reducing poverty be promoted;
5. socioeconomic development through regional and subregional cooperation be accelerated;
6. infrastructure projects be located in poor areas or that they incorporate specific components to ensure that the poor have increased access to project facilities and services; and
7. economic growth be sustained by enhancing quality and productivity of the environment and natural resources.

Supporting social development

Economic growth most effectively reduces poverty when accompanied by comprehensive programs for social development. Just as some targeting of economic development is necessary to reach bypassed areas, so also must social development be targeted. ADB's strategy recognizes this.

Social protection assists individuals, households, groups, and communities to better manage risks and achieve economic stability. Such programs include old-age pensions, insurance, formal and informal social safety nets, and policies to improve labor standards and labor mobility. In many societies, women suffer disproportionately from the burden of poverty and are systematically excluded from access to essential assets. Also, women often contribute more to improving the living standard and the income of poor households through their work, spending patterns, care giving, and other activities. Improving the status of women, particularly poor women, addresses a priority area of poverty reduction and provides important socioeconomic returns through reduced health and welfare costs, and lower fertility and maternal and infant mortality rates.

Facilitating good governance

The quality of governance is critical to poverty reduction. Good governance facilitates participatory, pro-poor policies as well as sound macroeconomic management. It ensures the transparent use of public funds, encourages growth of the private sector, promotes effective delivery of public services, and helps establish the rule of law. Since effective and efficient delivery of basic services by the public sector matters most to the poor, weak governance hurts them disproportionately.

In recognition of the importance of good governance for sustained economic development in Asia and the Pacific, ADB adopted, in October 1995, a policy on governance that identified four means to sustained economic development: accountability, participation, predictability, and transparency. Since 1995, ADB has engaged in a variety of country-based and subregional technical assistance activities to disseminate international experience in governance and public management, and through loans, has supported several governance reform programs adopted by the governments of its developing member countries (DMCs).

As a major extension of its governance policy, ADB formally adopted an anticorruption policy in 1998. The policy is centered on three objectives:

1. supporting competitive markets and public administrations that are efficient, effective, accountable, and transparent;
2. supporting promising anticorruption initiatives on a case-by-case basis and improving the quality of dialogue with DMCs on a range of governance issues, including corruption; and
3. ensuring that ADB's projects and staff adhere to the highest ethical standards.

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