Many consider the Asia region a quintessential economic success story. Indeed, per capita income in the region increased almost three-fold from 1990 to 2008. The quality of life has improved for a substantial share of the world’s population.
A recent study published by the Asian Development Bank (Wan and Sebastian 2011) shows that the number of people living in extreme poverty in Asia was almost halved from 1.42 billion in 1990 to 754 million in 2008. The region is also making progress towards achieving the Millennium Development Goal (MDG) targets that measure poverty against other yardsticks – such as access to clean water, gender parity in education and child mortality.
Nonetheless, donor nations must not yet turn away from the Asia-Pacific region. It still is home to two thirds of the world’s poor and its path to prosperity remains precarious. Many Asian countries are likely to miss even the MDG target relating to hunger.
Moreover, inequality has been rising in many Asian countries. Income gaps are widening, for instance, between rural and urban areas. Such gaps compound problems of access to sanitation, basic health care and education. Unemployment in the region has been low in general. The snag is that the informal sector, in which people are most likely to suffer poverty and vulnerability, employs two third of Asia’s work force. Women, in particular, struggle to find well paid formal sector jobs. Unless the benefits of Asia’s phenomenal growth are shared more equitably, growing disparities are likely to tear the social fabric and cause political instability.
There are further daunting challenges. Demographic change is one. Youth unemployment has recently been worsening in many countries. Nations with very many young people like India or the Philippines need lots of additional productive jobs to allow this generation to make the most of its potential. The populations of other countries, like China and Sri Lanka, are ageing. They need sustainable, adequate and reliable social security systems.
Asia’s growth, moreover, has been largely export driven so far. In view of the sovereign debt problems that are haunting both North America and Western Europe, this trend is unlikely to continue. Unless domestic demand picks up in Asia, high growth rates will be unsustainable. More regional cooperation would contribute to rebalancing economies.
Dealing with climate change is an equally urgent matter. Global warming will drastically alter the region’s geography as well as its social and economic contours. New health hazards will threaten millions of people. Millions, moreover, will have to leave low-lying coastal areas. The economic and social impacts will be immense, and the poor and marginalised will be hardest hit. Measures to mitigate and adapt to climate change must be adopted in investment and development plans.
Inclusive growth is the right way to tackle these challenges. Inclusive growth means providing all members of society with opportunities to participate in – and benefit from – growth thanks to good jobs and equitable access to basic health and education services. Asia also needs reliable social protection systems: millions of families are at risk of suddenly plunging into poverty for reasons such as the illness or death of a breadwinner, but also natural disasters or economic shocks.
Development cooperation still matters in this world region. It must help to build sustainable infrastructure, develop financial sectors and promote private enterprise. People, moreover, must be provided with educational opportunities and professional health care. It is equally necessary to invest in social protection, public services in general, good governance and the rule of law.
After spectacularly reducing poverty in the past two decades, Asia and the Pacific could become prosperous within the next generation. To fulfil its potential, however, the region must address growing inequalities, reduce the vulnerability of many people – and keep on reducing poverty.