Almost 50 years of ADB.

Fifty years is an awful long time and during that time, some countries were able to move from third world to first world. Still others remain mired in poverty and things don’t seem to be getting any better. Indeed, with fast population growth, things may even be worse off now than 50 years ago.

During the Asian Development Bank’s creation, the rest of Asia outside of Japan was a mess of poverty. The idea of galvanizing resources to turn societies and economies around to improve the quality of people’s lives seemed a worthy and achievable goal. There were a lot of high hopes expressed on how ADB was supposed to catalyze development in Asia. 

It is interesting to note that every press release of ADB carries this final paragraph to describe what it thinks it is: “ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members --- 48 from the region.”

I take that to mean that is how ADB wants itself to be measured as well… how successful it had been through these years. I wonder how ADB measures up to that set of objectives.

Today, 46 years after, ADB’s impact on Asia’s development isn’t easy to describe. There is no doubt that through the years, ADB had been of some help to Asia’s developing economies, including ours, but one wonders if there are there things they could have done better? Are there things they ought to drastically reconsider in the light of what has actually happened to the countries it was mandated to help?

 Surely there have been resounding success stories. Singapore for one. And China is now a world economic super power that is second only to the United States even if it continues to claim that it is still a developing country. The spectacular performance of the Asian tigers --- showed how to evolve from Third World economies to First. 

Thus, can ADB consider itself a success as it prepares to celebrate its golden anniversary?

By ADB’s own reckoning, there are serious problems still… essentially as a consequence of growth for some countries and for others, a difficulty to really grow. In a report released last April 11, ADB warns that “Asia’s rapid growth is leaving millions behind, causing a widening gap between rich and poor that threatens to undermine the region’s stability.” That’s worrisome!

“Another 240 million people could have been lifted out of poverty over the past 20 years if inequality had remained stable instead of increasing as it has since the 1990s,” the ADB’s chief economist declares. Income divisions are rising markedly in the region, the ADB economist warns, where the richest one percent of households account for six percent to eight percent of total income.

Close to 20 percent of total income went to the wealthiest fiver percdent in most countries. The share of income accruing to the richest households has increased over time. The richer are getting richer and the poor poorer. Surely this isn’t what development is about.

Of course ADB is only an enabler and what has or has not happened to countries in Asia remains the domain of their people and their governments. But one can’t help thinking if maybe ADB’s way of doing things could stand some overhaul.

Indeed, ADB’s report contains some prescriptions, many not that unfamiliar to us. Who can argue against more equal access to education, health and other public services? We know inequalities in access to these things greatly hinder the poor from raising their living standards.

Things are still quite bad. According to ADB, school drop-out rates are up to five times higher for children in the poorest families, while the chance of a poor infant dying at birth can be 10 times higher than those of a child born to a rich family.

Says the ADB Chief Economist: “Inequality leads to a vicious circle, with unequal opportunities creating income disparities, that in turn lead to dramatic differences in future opportunities.”

And if you thought that technology is starting to close the divide, you would be wrong. “Highly uneven distribution of new technology, infrastructure and investment is further fueling the divide, particularly between rural and urban areas, and coastal and inland provinces.” Even in China today, that’s the problem that disgraced Politburo member Bo Xilai tried to exploit.

So, is ADB still relevant? Put another way, is the ADB’s way of doing things still relevant? It seems to me ADB’s anti poverty goals remain terribly relevant. Perhaps, it is in the way ADB approaches their original goals that need rethinking in this age of Facebook and Twitter.

No one can disagree with ADB’s lofty objectives describing ADB’s reason for being. But by ADB’s own Chief Economist’s reckoning, something is still not right in the region for which it is responsible. In this vein, I wonder if ADB is capable of doing an honest soul searching of where they could have done better.

Someone must bring this matter up when the ADB Board of Governors meets here in Manila the first week of May. The glitz that will surround the conference we are hosting is simply traditional and ceremonial. We must make this Manila conference more substantial.

Maybe P-Noy should spark the need for ADB to reassess itself so it could be a more effective partner for development as measured by a very drastic reduction of poverty in the region. After all, ADB touts itself in its website as aiming for an Asia and Pacific free from poverty.

And by ADB’s own reckoning, “approximately 1.8 billion people in the region are poor and unable to access essential goods, services, assets and opportunities to which every human is entitled.” That’s quite a burden to bear and it is quite proper to raise the question of how ADB intends to carry that.

As host country, the Philippines is introducing pioneering initiatives for this year’s ADB Annual Meeting such as ASEAN + 3 parallel event. That’s well and good because Asean needs waking up too. Maybe, Asean could raise questions about ADB like why should its chief executive always be a Japanese?

The issue of keeping the IMF headed by a European and the World Bank by an American had already been raised. With the emerging economies gaining power, change is just a matter of time.

Perhaps the question of the bank’s leadership is part of the problem that affects ADB’s relevance to countries in the region that are so different from Japan. Wouldn’t a development economist from Indonesia or India be more in tune with what needs to be done than a Japanese banker?

And that’s the other thing. Maybe calling ADB a bank makes it attract people who think they are bankers and think like bankers entitled to bankers perks. With the mindset of the elite, these people have no idea and no inclination to learn how the poor they are supposedly trying to help manage to eke out a living on a few dollars a day.

We have had our problems with our own development bank in that regard. Our Development Bank of the Philippines went against the spirit of its charter and funded what looks like an insider trading operation that benefited the well connected. Bankers apparently, will always be bankers even if they add “development” to describe what they are supposedly doing.

The informal settlers living in Manila’s reclaimed area near the ADB conference site, if they happen to see the pomp and glitter of the event, will probably be surprised if told all that pomposity is supposed to be concerned with lifting them out of poverty.

It may be difficult for a squatter to feel anything in common with the ADB conference attendees but much could be done with the right frame of reference and the right people doing the right projects. As it approaches its 50th year, ADB should rethink itself and not be afraid to take radical approaches to end age old problems.

Einstein

Atty Sonny Pulgar sent this one.

Einstein dies and goes to heaven only to be informed that his room is not yet ready. So he is introduced to his room mates in a dormitory.

“See, here is your first room mate. He has an IQ of 180!”

“Why that’s wonderful!” says Albert. “We can discuss mathematics!”

“And here is your second room mate. His IQ is 100!”

“That’s wonderful! We can discuss the latest plays at the theater!”

Just then another man introduces himself. “I’m your last room mate and I’m sorry, but my IQ is only 80.”

Albert smiles back at him saying, “So, where do you think interest rates are headed?”

Boo Chanco’s e-mail address is [email protected]. Follow him on Twitter @boochanco