By DPA
Manila : The rich are growing richer faster than the poor in developing Asia as disparities in standards of living continue to widen in one of the most dynamic regions in the world, an Asian Development Bank (ADB) study said Wednesday.
According to the bank’s publication Key Indicators 2007, the poor are still lagging behind in the region’s rapid development even as poverty rates have declined in the past decade.
“In a region as dynamic and vibrant as developing Asia, low growth in incomes of the poor is reflective of weakness in the pattern of growth,” Ifzal Ali, chief economist of the Manila-based ADB, said. “Growth inequalities can weaken social cohesion.”
The ADB report said relative and absolute inequalities have increased in most parts of developing Asia between the 1990s and 2000s.
Relative inequality refers to proportionate differences in incomes, while absolute inequality refers to actual dollar differences in incomes.
Due to increasing absolute inequality, the most well off have experienced considerably larger increases in their standards of living than the least well off, the report said.
“For example, the expenditures of the rich or top 20 percent have increased much more than those of the poor or the bottom 20 percent,” the report said. “This has happened even in countries such as Indonesia and Malaysia where relative inequality declined.”
The report warned that a lack of economic opportunities is often significantly associated with a higher intensity of political violence.
“In societies where wealth is concentrated in the hands of a few, there is danger of policy levers being captured by the rich for their own benefit and a weakening of the institutional foundations of the growth process,” it added.
The ADB report identified unevenness in growth in incomes across urban and rural areas, leading and lagging sub-national regions, and highly educated households and the less educated as important factors associated with increases in inequality.
The bank urged governments to implement complementary policies to counter negative distributional impacts of market-oriented reforms, such as social protection mechanism and skills and training programmes.
It also stressed the need for a partnership between the public and private sector to develop new economic activities and industries that generate new employment opportunities that do not bypass the poor.
Policymakers were also urged to focus on radically improving the quality of basic health care and education available to Asia’s disadvantaged.
“Inequalities in life start early, and they begin with extreme circumstances that deny millions the opportunity to have adequate nutrition, health and basic education,” the bank added.
“The key challenge to public policy here lies on not just increasing the quantum of public expenditures, but also ensuring that these are well targeted, effective and funded through mechanisms that do not detract from economic growth,” it added.