BAKU, AZERBAIJAN – Countries in Asia and the Pacific can no longer pursue growth at any cost without embracing better governance to build economies that are socially inclusive and environmentally sustainable, according to the Asian Development Bank’s (ADB) Independent Evaluation Department.
The region’s governance performance, however, does not match its success in producing fast-growing economies, an expert panel concluded at a seminar hosted by Independent Evaluation. Global indicators point to weaknesses in governance and ADB stakeholder surveys consistently highlight poor governance and corruption among member countries.
To address the problem, governments must retool their institutions to enhance transparency, accountability, predictability, and enforceability. The stakes are even higher in a growing number of Asian countries where substantial revenues are generated from natural resource exports, including in Central Asia.
“When supported by sound governance arrangements, management of natural resources such as oil and gas or metals and minerals, can contribute to the well-being of people and ecology,” said Vinod Thomas, Director General at Independent Evaluation. “But the management of natural resources poses tough governance challenges that, when not confronted, can hurt development and, in a worst case scenario, constitute a resource curse.”
To ensure that benefits from resource revenues foster inclusive and sustainable growth, governments should promote sound macroeconomic and exchange rate policies, transparent and accountable public financial management systems, and sovereign wealth funds with an independent governance structure.
The panel discussion featured Shahmar Movsumov, CEO of the Azerbaijan State Oil Fund; Daniel Kaufmann, President of the Natural Resource Governance Institute; Charlotte Slente, Denmark’s Special Envoy for Fragile Countries; and M. Jae Moon, Director of Yonsei University’s Institute of State Governance Studies.
Panelists shared insights on regional development challenges and the crucial role of innovative governance in addressing them. Also discussed was how ADB can help countries meet governance challenges, for example, by supporting public financial management reforms.
ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members – 48 from the region. In 2014, ADB assistance totaled $22.9 billion, including cofinancing of $9.2 billion.