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p. 2 of 14 BACK | NEXT Preface Emerging Asia: Challenges to Development Regional Development Challenges The Global Context ADB’s Response to the Region’s Challenges The Strategic Agenda Implementing the Strategy Resources for the Strategy Next Steps

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

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Emerging Asia: Challenges to Development

The context of Asian development has changed dramatically since the establishment of the Asian Development Bank (ADB) more than three decades ago. It is likely to change at least as much in the next 15 years, and to present considerable challenges—both as constraints and as opportunities—to the countries of the region. These challenges are the outcome of regional and global trends that will shape the development agenda of the region and ADB’s corresponding long-term strategic agenda.

The developing Asia and Pacific region¹ 1 is the largest developing region in the world in landmass, population, and aggregate income. Its 3.2 billion people comprise over 70 percent of the developing world’s population, but account for only 47 percent of the aggregate gross domestic product (GDP) of all developing countries².2 This is only slightly more than 11 percent of the GDP of the countries in the Organization for Economic Cooperation and Development. The developing Asia and Pacific region is very diverse, ranging from very large countries and economies such as the People’s Republic of China (PRC) and India to very small island economies in the Pacific and small landlocked economies in continental Asia.

The region as a whole has achieved unprecedented sustained growth and development in the past three decades. Growth was accompanied by a dramatic decline in the incidence of absolute poverty, significant increases in per capita incomes, and notable improvements in key social indicators. GDP per capita quadrupled in real terms between 1975 and 2000 in East Asia, nearly tripled in Southeast Asia, and doubled in South Asia. Life expectancy rose from 50 years to more than 62 years in South Asia and from 54 years to 67 years in Southeast Asia. Adult literacy rates rose in East and Southeast Asia from around 80 percent in 1980 to more than 90 percent in 1995. In South Asia (with the notable exception of Sri Lanka, where the literacy rate was already very high), literacy rates increased from 40 percent to about 50 percent during the same 15 years. These figures reflect a remarkable record of development for the region.

However, aggregate success hides a great diversity of development experiences: the region includes economies at very different stages of development; among and within countries, not all have shared equally in the benefits of the region’s growth. East and Southeast Asia, spurred by astonishing growth rates, achieved a remarkable socioeconomic transformation. South Asia also made significant progress, but still lags far behind East and Southeast Asia according to most economic and social indicators. The Central Asian republics fell dramatically into poverty after the breakup of the former Soviet Union precipitated their transition to market economies. In many of the small island economies of the Pacific, income growth is too slow to overcome poverty. Similarly, within countries wide differences reflect the uneven distribution of the benefits of development, including the continuing marginalization of significant groups. Success also created its own problems: increasingly unequal distribution of income and wealth, and the emergence of new groups of poor (such as those in urban areas), as well as environmental degradation and resource depletion, often accompanied growth.

Almost two thirds of the world’s poor live in developing Asia and the Pacific³. While the vast majority of the poor are in the PRC and India, the incidence of poverty remains high throughout the region, especially in smaller countries. In South Asia, the actual numbers of poor people have increased since 1987, although the percentage of poor declined moderately during the 1990s. And while poverty has been greatly reduced in some areas, the 1997 Asian crisis reinforced the painful lesson that even gains made through many years of rapid and sustained growth can be all too quickly reversed. The Asia and Pacific region is thus central to the fight against global poverty, and more generally to the achievement by 2015 of the international development goals (IDGs), which have been set by a broad consensus of the global community (Box) and to which ADB is firmly committed.

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