Inclusive Growth Key to Merging Two Faces of Asia - ADB

MANILA, PHILIPPINES - Rising inequalities in income and access to employment and social services in Asia are casting a shadow over its unprecedented economic boom, and governments and the private sector need to work together to make the benefits of growth more inclusive, says a new book from the Asian Development Bank (ADB).

Poverty, Inequality and Inclusive Growth in Asia: Measurement, Policy Issues, and Country Studies, edited by Juzhong Zhuang, Assistant Chief Economist in ADB’s Economics and Research Department, examines the growing discrepancies in wealth and persistent gaps in access to social services that have emerged during Asia’s extraordinary economic expansion in recent decades, and lays out policy options to address inequities and support inclusive growth.

Over the past 20 years, the region’s per capita gross domestic product has expanded almost three-fold, with the percentage of people living in extreme poverty ($1.25 a day or less) nearly halved. At the same time Asia is still home to two-thirds of the world’s poorest people, while in a large part little progress has been made on key social indicators, such as child and maternal mortality rates. Despite market liberalization and globalization creating new wealth and economic opportunities, inequalities in both income and non-income indicators have widened in many countries, particularly between large urban centers and the countryside.

“Developing Asia’s stellar growth rates have masked rising inequality, leading to two faces of Asia – one shining and the other suffering,” said Mr. Zhuang. “Merging them will be a development challenge for many years to come. Inclusive growth with its focus on creating economic opportunity and ensuring equal access will play a pivotal role in narrowing the gap.”

The book – which draws on research papers carried out by ADB economists and their collaborators – looks at recent trends of income and non-income inequality and poverty in the region; discusses the underlying driving forces; examines the concept of inclusive growth; and provides in-depth analysis of key policy pillars of an inclusive growth strategy, including employment, access to public services, social protection, and governance and institutions. The book also includes six country studies presenting detailed information on growth, poverty, and inequality dynamics in the People’s Republic of China (PRC), Nepal, the Philippines, Thailand, and Viet Nam.

It says an effective inclusive growth strategy needs to focus on high growth to create productive jobs, social inclusion to ensure equal access to opportunities, and social safety nets to mitigate risks and cushion the most vulnerable groups. To do this, governments should address existing policy, governance and institutional weaknesses, promote social inclusion, and invest in, and improve access to, basic services.

“Fighting poverty and inequality by focusing public policy on improving delivery of basic health care and education services, especially to the disadvantaged, strengthening social protections and significantly increasing the productive employment opportunities of a wide population should be a minimum agenda to which developing Asia’s policy makers must commit,” said Mr. Zhuang.

The book notes that many economies in the region, including India and PRC, recognize the potentially negative social, economic, and political consequences of increasing inequality in access to economic opportunity, and are now embracing inclusive growth as the central element of their development plans.

At the same time, the book also points out that no inclusive growth strategy can succeed without the support of the private sector, with initiatives such as public-private partnerships playing a key role in creating productive jobs.