Social Development and Poverty
ADB’s central mission is working to reduce poverty in Asia and the Pacific and to ensure the benefits of economic growth and social development are equitably spread.
Poverty reduction has been central to the bank’s operations since its establishment in 1966. Asia’s extraordinary economic expansion has lifted millions out of poverty, but sustained effort over decades remains critical to ensure that the poor are able to benefit from and contribute to the growth process. ADB’s Strategy 2030 envisions an Asia and Pacific that is inclusive, where the region’s gains and opportunities are shared by all.
Poverty reduction in Asia and the Pacific, even in countries with relatively high per capita income, remains an unfinished agenda. Despite the region's impressive economic growth in recent decades, it remains home to a large share of the world's poor. In 2017, more than 200 million people were living on less than $1.90 a day. Around one billion people were living on less than $3.20 a day. Rapid economic growth has not translated into an even distribution of income and opportunities. Inequality in income, wealth, and opportunity has grown in most developing member countries (DMCs).
Large numbers of people are constantly at risk of falling back into extreme poverty during economic downturns and shocks such as the COVID-19 pandemic. ADB estimates that the pandemic has pushed about 78 million people in Asia back into extreme poverty and created approximately 162 million newly poor people, particularly in South Asia.
Poverty has multiple dimensions, and many people in the region face not only income poverty but also poor health, lack of education, food insecurity, and inadequate living conditions. The number of people without adequate food in the region remains significant. More than 60% of undernourished people globally (more than 500 million people) live in Asia.
ADB’s first operational priority in its corporate Strategy 2030 focuses on addressing remaining poverty and reducing inequalities. Central to ADB’s approach is a focus on investing in human capital development and social protection, generating quality jobs, and reducing inequality of opportunity. Asia’s recent success is not only its impressive economic growth, but also the huge reductions in extreme poverty across the region. ADB’s work, with its focus on inclusivity, has contributed significantly to regional poverty reduction for more than half a century.
Poverty and social analyses are a prerequisite for all ADB loans and grants. These analyses identify potential social issues and define actions during project design and implementation to ensure that projects maximize social benefits and minimize social risks. After project completion, project performance evaluations assess the impact of projects on targeted beneficiaries, affected people, and other stakeholders.
ADB’s program for social protection support reduces poverty and vulnerability by promoting efficient labor markets, diminishing risk, and protecting against loss of income. Social assistance programs help ensure income security and access to basic services for poor and vulnerable populations. Sectors that may receive support from such programs include education, finance, health, and public sector management.
Social insurance programs mitigate risks by providing income support in the event of illness, disability, work injury, maternity, unemployment, old age, and death. Labor market programs support job related training, particularly for the low-skilled and marginalized. Sectors that can benefit from such labor market programs include education and infrastructure (energy, information and communication technology, water, and transport).
ADB’s Social Protection Indicator estimates that close to 60% of people across the region are without adequate social protection. Benefits remain quite low in the region and many systems lack adaptability and shock responsiveness. Social protection policies and programs have a central role to play in addressing the social, economic and health dimensions of shocks like the COVID-19 pandemic.
Asia and the Pacific has experienced rapid economic progress over the past 25 years, creating 30 million jobs annually and contributing to significant improvements in living standards. The growth in jobs has been accompanied by improved productivity, higher earnings, and large reductions in poverty. Despite continued economic growth (4.6% in 2019) and a relatively low unemployment rate (4.4% in 2019), Asia’s job-related challenges persist. While economic growth has rapidly created new jobs, they have not always been quality jobs that provide a secure and stable source of income, particularly for women, the poorest and most vulnerable.
A coherent approach to facilitating quality jobs will amplify returns from infrastructure and other investments for ADB’s development member countries. Job creation from investments in infrastructure can be reinforced through appropriate diagnostic tools. The ADB-supported Visakhapatnam–Chennai Industrial Corridor Development Program is linking infrastructure with employment growth, potentially generating 11 million additional jobs over 30 years.
Many poor families have benefited from the expansion of social protection programs in the region, especially from targeted social assistance. However, cash transfers can only address a part of the poverty problem. Asia and the Pacific governments are increasingly interested in the social protection for economic inclusion, or the Graduation Approach, to serve the poor and vulnerable population by helping them become more resilient in tackling the multifaceted constraints they currently face.
The Graduation Approach is a comprehensive, holistic, time-bound, and carefully sequenced set of interventions that aims to “graduate” people from extreme poverty to better lives. The approach combines support for immediate needs (through cash transfers or food support) with longer-term investments (through training, enterprise development, and building of skills, knowledge, and confidence).
Countries are building on existing government-led national programs for jobs and livelihoods, social safety nets, and financial inclusion, as part of their long-term recovery efforts following the social and economic impacts of the COVID-19 pandemic.
The Asian Development Bank is financing the Graduation Approach initiatives in Pakistan and the Philippines, and will also pilot test in Mongolia. It will also fund large-scale resettlement and income restoration efforts in India and the Philippines, with other countries expressing interest to join.
The Graduation Approach takes a multidimensional view of addressing poverty in context-specific manner, wherein a household has an economically viable livelihood, is food-=secure, and is connected to essential services.
Internal and external migration are important contributors to economic and social development across Asia and the Pacific. Migrants often bring new and updated skills, trade, and entrepreneurship. Their remittances are important to poverty reduction and boosting economic activity in their places of origin. However, the movement of people can lead to challenges such as urban overcrowding, pressure on limited services, loss of human resources, environmental damage, and health issues. ADB supports its DMCs to maximize the benefits of human mobility, while effectively managing its challenges.
Disability is a major vulnerability globally and in the region. Approximately 70% of the global population of people with disabilities (690 million) live in the Asia and the Pacific region. Forty-three countries in the region have ratified the Convention on the Rights of Persons with Disabilities; only 12 governments have anti-discrimination legislation. Many persons with disabilities face extreme poverty because of lack of access, and exclusion from opportunities. The poverty rate among persons with disabilities is higher than the overall population. In countries where data is available, the difference can range from 3.9% to 20.6%.
In terms of employment, persons with disabilities are two to six times less likely to be employed than those without disability. In some countries, social protection measures such as government-funded healthcare and disability benefits only reach around 28% to 30% of people with disabilities. Among children with disabilities, at least one third are unlikely to receive early intervention. The issue of disability is expected to gain increased attention in the coming years, due in large part to rapid aging in the region. This will require action regarding affordable assistive technology, development of long-term care systems and services and inclusive infrastructure design. Addressing these challenges will require employing multiple approaches: empowerment and participation of people with disabilities, attention to needs across the life-course, improving data on disability (age and gender-sensitive), and cross-sectoral engagement.
Asia and the Pacific is both the fastest aging and youngest region of the world. Longer life expectancies and decreased fertility rates are leading to rapid aging in Asia and the Pacific. By 2050, one in four people in Asia and the Pacific will be over 60 years old, reaching close to 1.3 billion people. While increased longevity is a positive outcome of economic and social development, this demographic transition will have important social and economic consequences for the region.
To support poverty reduction in its DMCs, ADB administers a number of special multi-donor poverty funds:
Strategy 2030 sets seven operational priorities, each having its own operational plan. The operational plans contribute to ADB’s vision to achieve prosperity, inclusion, resilience, and sustainability, and are closely aligned with Strategy 2030 principles and approaches.
This Social Protection Directional Guide provides strategic directions in social protection for the Asian Development Bank.