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How Inclusive Is The Growth in Asia and What Can Governments Do To Make Growth More Inclusive? (Presentation)
How Inclusive Is The Growth in Asia and What Can Governments Do To Make Growth More Inclusive? (Presentation)
1. 2. 3. 4.
The myth of the middle income trap Recent growth in Asia is not poverty reducing Asia should move from Poverty Reduction to Inclusive Growth How to make growth inclusive?
Employment is the key challenge Social protection another and governments have to increase public social spending for social and municipal services
5.
all Asian countries except LAO are MICs ($1,000-$12,000) Study of 124 countries world-wide 1950-2010:
Trap = 28 years in the lower middle income group, and 14 years in the upper middle-income group In Asia, only 2 countries are in the LMIC trap (PHI, SRI) and 1 in the upper MIC trap (MAL but may get out of it soon); INO and PAK will most likely fall in the MIC trap soon
Whatever definition of the MIC trap one chooses, growth matters but its importance is overstated (avoid the trap by changing the track of MIC towards better integrating economic and social policy)
Especially between 2005 and 2010 continued success in poverty reduction ($1.25) is due to poverty reduction programs and not due to pro-poor growth, because reduction in $2 poverty much less Quasi poverty elasticity: despite of lower growth in 2002-2005 the PE was substantially higher (0.35) than in 2005-2008 (0.22) where growth was higher For some countries less poverty but more poor
Stagnating Poverty and More Poor People in the Philippines ($12.25) in the Philippines
70
35
poverty incidence ($1.25, 2005 PPP, %)
poverty incidence ($1.25, 2005 PPP, %)
60 50 40
31.9
42.2
30
19.5
20
40
60
80
100
Source: ADB/ESCAP/UNDP: MDG 2010 Report for Asia and the Pacific
Source: ADB (2007): Theme Chapter of ADB Key Indicators - Inequality in Asia
10
Inequality matters and is now of deep concern to many countries in the region: harmonious society (PRC), inclusive growth (IND)
11
Asia is rapidly urbanizing (from 41% in 2010 to more than 50% by 2030, and 64% by 2050) Doubling of the Urban population in Southeast Asia: from 43% in 2010 (252 million people) to estimated 65% (520 million) in 2050 Urban population growth is underestimated due to floating population Urban growth reduces poverty , but not urban poverty Cities but not mega-cities - need to be a main focus of addressing poverty and vulnerability in the future
2H: The environments of the poor: dryland and slum poor need biggest attention
The Environments of the Poor
different reasons for being poor the dryland poor
0.6 percent of total population 0.5 0.4 0.3 0.2 0.1 0 2005 very poor ($1.25) dryland upland coastal flood affected wetland slum 2020 2005 2020
does not affect the poor (defined as those living with less than $1.25/$2 a day) live in spatial areas where the environment affects the situation of the poor people the upland poor the flood-affected wetland poor the coastal poor
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TheEnvironmentsofthePoorinAsiaPacific verypoor($1.25) vulnerablepoor($2) 2005 2020 2005 2020 "environmental"poor 488.2 300.8 1,001.9 1,040.0 dryland 190.3 103.6 377.9 473.1 upland 68.5 27.5 129.7 125.8 37.7 125.0 163.2 coastal 63.2 8.2 103.7 50.0 floodaffectedwetland 58.1 slum 108.1 123.8 265.6 227.9 poorinpropoorgrowthpotentialareas 458.3 127.6 895.9 592.9 tiotalpopulation 3,467.0 4,041.5 3,467.0 4,041.5 totalpoor 946.5 428.4 1,897.8 1,632.9 percentoftotalpopulation 27.3% 10.6% 54.7% 40.4% environmentalpooraspercentoftotalpoor 51.6% 70.2% 53.0% 63.7%
Growth is inclusive, when the lower income groups (as well as vulnerable and socially excluded) create, participate in and benefit from growth.
m o re e q u ita b le e c o n o m ic g ro w th a n d s o c ia l d e v e lo p m e n t
54%
22% 22%
For it to be legitimated by the masses of the people, it has to : -generate sufficient decent jobs -thrive equity (regions, population groups, classes, gender, young-elderly) - create better living for all (health, education, municipal services) -provide for social protection against live, climate change induced and economic risks -Sustainable and systemic approach; l t dt
th e v e ry poor
From CCT to employment guarantee schemes From pensions for the public and well organized formal sector to universal health insurance From pension to savings (provident fund of SIN) From private education to skills training and higher education scholarships for those in need
High level of informal labor markets require new financing modalities with more public budget involvement (PPP and community involvement is possible, but )
Mother and child health is the key problems governments and donors give up the sector Health costs are increasingly becoming the main reason of poverty Health issues change, aggravated by climate change
Costs of higher education and skills training Investments in municipal services neglect housing and slum upgrading Asian governments spend less than Sub-Sahara African governments MDG indicators do not help much; need to be adjusted and point to tripe win opportunities for poverty reduction/inclusiveness, environmental sustainability and climate change adaptation
Active labor market policy Social protection for the lower income groups Social and municipal services
MICs can increase the revenue basis through general taxes (not through increasing user fees charged to the poor and low
income)
Reprioritization
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Inequality in Asia (Sept 2006) (http://www.adb.org/documents/books/key_indicators/2007/pdf/Inequality-in-AsiaHighlights.pdf) The World Banks New Poverty Data: Implications for Asia and ADB (Nov 2008): http://www.adb.org/Documents/Presentations/New-Poverty-Estimates/Poverty-Data-Implications.pdf Poverty in Asia and Pacific. An Update (Sept 2011) Social impact of the global recession: http://www.adb.org/documents/books/poverty-sustainable-development/default.asp Quality Jobs (Aug 2011): http://www.adb.org?Documents/Books?Key_Indicators/2011/ Inclusive Growth, Full Employment, and Structural Change. http://www.adb.org/Documents/Books/Growth-EmploymentStructural-Change/default.aspn The Rise of the Asian Middle Class (Aug 2010): http://www.adb.org?Documents/Books?Key_Indicators/2010/ Environments of the Poor: http://adbweb/Documents/Events/2010/Environments-Poor/default.asp ADBs Annual Poverty Reduction and Development Effectiveness Reports: http://www.adb.org/poverty/progressimplementing-prs.asp