Capital movements
Key Indicators 2007: inequality in Asia
How can growing inequalities in Asia be addressed?
Authors:
; ADB
Publisher:
Asian Development Bank , 2007
Over the last decade, high rates of economic growth have become more common in Asian countries, yet it is widely believed that inequalities have also grown in many countries. How correct is this perception, and how broadly does it apply to a region as diverse as developing Asia? This paper highlights key findings from a special chapter of ADB’s Key Indicators report 2007, which addresses this question by considering recent data on inequality in incomes and, especially, consumption expenditures.
Based on the evidence from the new report, the chapter argues that increasing inequality in developing Asia reflects not so much “the rich getting richer and the poor getting poorer”, but the rich getting richer faster than the poor. It concludes that this is quite likely that fast growth of incomes among the rich has been driven, to a considerable degree, by the opportunities unleashed by market-oriented reforms, international integration, and new technologies.
In spite of this, the authors claim that to significantly roll back reforms and engagement with the international economy is unlikely to be feasible or even desirable. They do argue, however, that
public policy cannot simply ignore inequality, which can undermine economic growth, social cohesion and the quality of policies and institutions.
The chapter concludes that a pragmatic way forward would be to focus on policies that would significantly lift the incomes of the poor by enabling them to access the opportunities that reforms and integration bring. It also stresses that the need for redistributive policies will not go away - especially if inequalities continue to increase over the next two or three decades - and suggests that all concerned stakeholders, including policy makers, must learn the from mistakes and successes of past attempts at redistribution.
The full 491-page Key Indicators report can be downloaded from the ADB website (http://www.adb.org/statistics).
