Call for Stronger Focus on Inclusive, Green Growth: Independent Evaluation at ADB

IED News Release | 4 March 2014

MANILA, PHILIPPINES – In the face of the growing challenges of socially inclusive and environmentally sustainable growth in Asia and the Pacific, the Asian Development Bank (ADB) needs to strengthen the impact of its operations on these two vital aspects of development, says a study by the institution’s Independent Evaluation, which assesses ADB operations.

As many countries in the region grapple with rising income inequality and worsening environmental conditions while striving to maintain strong growth, the expectations of governments and businesses for ADB’s support are at an all-time high, says Independent Evaluation’s just released study Inclusion, Resilience, Change: ADB’s Strategy 2020 at Mid-Term. The study assesses ADB’s development strategy, which runs from 2008 to 2020, at the halfway mark. Experts from the United Nations and the European Union and senior government officials from Asia contributed to the review.

“Amid ADB’s great strengths, there’s an important gap to be addressed in gearing the institution’s operational priorities more squarely with its strategic agenda for inclusion, sustainability and regional integration”, says Independent Evaluation’s director general Vinod Thomas. “Immense development benefits could result from such a shift that supports social inclusion more directly through job creation and improving livelihood, and furthers environmental care and climate action, while generating high growth”.

Developing Asia and the Pacific continues to deliver robust economic growth, projected by ADB to average 6.2% this year. But income inequality is widening in the 12 countries that make up 80% of the region’s population, which in turn is weakening the impact of growth on reducing poverty and could threaten social cohesion.

Given ADB’s emphasis on providing financing support for infrastructure projects, which accounted for 72% of its total loan portfolio of just over $65 billion during 2008–2012, the study urges ADB to promote inclusion by stressing projects that especially benefit lower-income and vulnerable groups, including women. Examples include projects that improve access to energy and social services in rural areas and public transport in cities.

Evaluations of ADB-supported infrastructure projects have shown that inclusion impacts are highest when combined with complementary financing in related development areas. For example, water and sanitation projects have a better chance of reducing water-related diseases if joined with education efforts promoting good hygiene. Similarly, road projects can improve inclusiveness if they are linked with programs addressing education and health care in the same area. Many ADB-supported projects also require activities promoting good governance and private sector development. In essence, says Thomas, “this means that connecting the vital, but often under-recognized, dots has high payoffs in the development process.”

The study notes that ADB makes sizable investments in rehabilitation and reconstruction following natural disasters; extending, for instance, $892 million to the Philippines last December for the rehabilitation of areas ravaged by Typhoon Haiyan. This amount includes a $500 million emergency loan, a $372 million loan for a community driven development project, and a $20 million grant from the Japanese Fund for Poverty Reduction. “But following a succession of devastating disasters in recent years—in the People’s Republic of China, India, Pakistan, the Philippines, Thailand, and the Pacific—the need for ADB to increase financing and other resources to help countries prepare better for disasters and to manage the ever-growing risk of climate change is especially urgent”, says Benjamin Graham, a co-author of the study.

“Investments in disaster resilience, generated through the approach of building-back-better, ought to be a major priority for ADB, and not a niche-product,” says Graham.

Concerns over rising inequality, the environmental costs of the current pattern of economic growth, and the dangers of climate change are at the forefront of the emerging issues that are shaping a new development path for the region.

“Asia and the Pacific is at a turning point, as recognized in the national plans of many countries,” says Thomas. “In view of the intensity of the challenges, Strategy 2020’s goal for strong, socially inclusive, and environmentally sustainable growth is even more urgent today than when it was approved five years ago. ADB, as the region’s premier development institution, can and must rise to the challenge of helping to meet this goal operationally.”

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To download the study, visit: http://www.adb.org/documents/inclusion-resilience-change-adb-s-strategy-... and click on the PDF.

About Independent Evaluation at the Asian Development Bank
Asian Development Bank's Independent Evaluation, reporting to the Board of Directors through the Development Effectiveness Committee, contributes to development effectiveness by providing feedback on ADB's policies, strategies, operations, and special concerns in Asia and the Pacific.