Asia may be rising on a wave of prosperity, but creeping poverty threatens over 620 million Asians.
“A rising tide lifts all boats,” Asian Development Bank (ADB) managing director general Rajat Nag said of the projected growth of Asian economies over the coming decades."
He cautioned, however, that unless Asian governments plug the holes in their ships of state, more than 620 million Asians could find themselves drowning in poverty.
Speaking at the Manila leg of the Asian Leadership Dialogues organized by Platinum Circle, an international business group of high-revenue companies, Nag said the ADB “expects Asia to do very well in the next 30 years.” But for that to happen, he qualified, Asia has to invest in its infrastructure, institutions, environment and, most of all, its people.
The incidence of poverty in Asia, pegged at those living below US$1 a day, has decreased from 50% in 1970 to its present level of around 14.5%. Remarkable as it is, it still threatens some 620 million with extreme poverty.
By 2020, Nag said, less than 10% of Asia will be living below the poverty threshold. Until then, Asia has to contend with increasing inequality within nations. “The rich are getting richer faster than the poor are getting richer,” lamented Nag—and they are not being given the tools to change this.
An estimated 107 million Asian children are malnourished and already “disadvantaged for life,” Nag said, and 1.9 billion have no access to sanitation. What's more, 100 million Asian children are uneducated, contributing to a “serious shortage of skilled workers” in the world's most populous continent.
To make economic growth inclusive, Nag admonished the governments of Asia to focus on providing its citizens with basic health and primary education. Otherwise, Asia's youth—around 29% of its population of 4.17 billion people—could become a burden if not provided with a chance to participate in the global economy. As it is, lack of education has forced many into low-paying jobs.
Build It, They Will Come
Asia must also close its serious infrastructure deficit to ready itself for economic growth. Nag said that at least US$400 billion must be spent yearly to extend road and transport networks and to ensure adequate water and power supply in a region that is rapidly becoming urbanized.
China has set aside 45% of a US$586 billion stimulus package for the development of highways, power grids, and transport systems. To connect its cities with one another, the Chinese government earmarked US$88 billion for railways alone. And US$146.5 billion has been allocated for the rehabilitation of areas in Sichuan province devastated by last year's earthquake.
The Philippines has also been developing its road networks and beefing up inter-island transport. Although having lighter purses than China's to work with, the rest of Asia must also invest in infrastructure to spur economic growth in the region. “Asia needs to think of itself as interdependent,” Nag pointed out.
Weak Institutions, Firm Hand
Infrastructure development, and development in general, is hindered by Asia's weak institutions, said the ADB chief. Allegations of corruption in a World Bank-funded road project hogged the headlines in the Philippines early this year. In an investigation by the Senate, the Ombudsman was accused of not acting on the allegations despite being informed by the World Bank as early as 2006.
Not even China has been spared, as was evident with the worldwide panic over harmful China-made milk, toys, and pet food, suggesting a lax regulation of its burgeoning industries.
To usher in the Asian century, governments have to be in control and should able to implement the rule of law fairly. “We have to see that laws will be enforced not just because one is from the wrong side of the tracks,” he said.
More stringent restrictions and an adherence to the rule of law may require more government intervention in business, but Nag argues, “There is always a role for the guiding hand.” The benefits are well worth the change in priorities. Developing infrastructure and strengthening institutions will make the region more open to business and will soon pay for themselves.
Policies that will directly benefit Asians living in extreme poverty will be for the greater good as well. A more employed and employable Asia will mean a higher standard of living for all, and a stronger regional market. Moreover, two-thirds of Asia's production is in exports, but it doesn't have to be with a mammoth consumer base at home.
In a little over a decade, the Asian market will be bigger than America and Europe combined and Asia is set to ride the crest of a high and beautiful wave. The good news is that it still has time to make itself seaworthy.