Asia rising—and faster than expected

By Erik Solheim on Sun, 04 May 2014

The world is changing even faster than we thought.  Numbers confirming that the People’s Republic of China will become the biggest economy in the world this year were released just a few days before the Asian Development Bank Annual Meeting opened in Kazakhstan’s shiny capital Astana this weekend.

Earlier this year, India was declared free of polio and we learned that Viet Nam provides better education for high school children than most European countries. Then OECD named the United Arab Emirates the most generous provider of development assistance in the world at 1.25% of national income, while Japan had the largest increase in aid at 36.6%.

Asia is surely rising and it is happening faster than anyone ever expected.

The ADB meeting is themed “Connecting Asia with the Changing World,” but it is just as much about connecting the world with a changing Asia. Asian success stories have broken down the old distinctions between rich countries and poor, developing and developing, development assistance providers and aid recipients.

Singaporeans are now richer than North Americans, Koreans richer than Italians and the average Chinese wealthier than Ukrainians. This enormous progress has contributed to halving the number of people in the world living in extreme poverty since the 1990s. Asian success has been a global force for good. But the figures hide large inequalities and environmental degradation.

Income equality has been on the rise all over the world in the past decades. Inequality has increased by 11% in low- and middle-income countries since the early 1990s. Poor people used to live in poor countries. Today, 1 billion poor people live in successful middle income countries like the PRC, India, and Indonesia. This demonstrates that many people have not yet benefitted from the strong economic performance. The immense growth has also taken its toll on the environment. Eradicating poverty on our growth pattern would require several planets.

The eradication of poverty and new sustainable development goals post-2015 will be agreed when Chinese President Xi Jinping, US President Barack Obama, and the rest of the world leaders meet at the UN in New York next year. The challenge will be how to get people out of poverty and grow economies in an environmentally and socially sustainable way.

Countries must be in charge of their own development. Most of the finances for health, education and green technologies will come from domestic resources and private investments. But development assistance can play a catalytic role to help generate more resources.

We have launched Tax Inspectors without Borders and experiences from Africa and Latin America show that 1 dollar invested in tax collection can return as much as $1,000. OECD data and success stories such as South Korea, PRC, and Viet Nam suggest that there is a vast untapped potential for greater tax revenue generation in many Asian countries.

Development assistance can underpin effective policies that reduce inequality such as redistributive cash transfers and the provision of education, health, and other public services. Development assistance can unlock more investments for wind farms and solar power plants by alleviating some of the risks. The OECD Development Assistance Committee is working with donor countries, ADB, and other partners to find the best way to fight poverty and finance development with all available resources. Read more about this work at www.oecd.org/dac

ADB aims for an Asia and Pacific free from poverty and it is inspiring to be a part of the generation that will see the end of poverty. All we need is the political will to make it happen!