Poverty incidence in Asia, Pacific region drops to 19 percent: ADB
ISLAMABAD (December 15 2007): The Asian Development Bank (ADB) says that the poverty incidence in Asia and Pacific region declined from about 34 percent to 19 percent based on the $1-a-day yardstick and from 75.3 percent to 57.4 percent, based on the $2-a-day yardstick between 1990 and 2003.
The bank says that conscious actions are critical for rural poor to benefit from growth in Asia as, according to the bank, mere economic growth is not sufficient to reduce poverty especially in rural Asia.
"Sustained overall economic growth alone is not sufficient. A clear strategy is needed to harness consistently the full potential of overall economic growth for inclusive rural development," said the ADB.
More than 40 percent of the rural people in Asia live under informal tenure systems and insecure land rights. For example, although China has made adequate progress in land tenure through the new Rural Land Contracting Law where fully implemented, many villages still do not provide full security of land tenure.
In countries like India, Nepal, Pakistan and the Philippines, the high rate of population growth has become a real challenge. The high population density in rural areas of these countries with already small landholdings, make agricultural development more difficult and inadequate for poverty reduction.
During the last three decades, the Asia and Pacific region has made a remarkable progress in economic growth and development. The most important aspect of this growth and development is undoubtedly reducing the incidence of poverty.
According to recent estimates, millions of rural people were able to escape poverty through better farm incomes, employment in agriculture, and rural non-farm enterprises; and through migration. But this was generally the case in Japan; Taipei, China and the Republic of Korea (RoK) which experienced high economic growth during the 1950s to the late 1970s; and other countries such as Malaysia, Thailand, Viet Nam, and the People's Republic of China (PRC), which experienced high growth rates during the 1980s and thereafter.
According to some estimates, in China alone, more than 200 million people in rural areas escaped poverty during 1978-2000. However, despite its dazzling performance in reducing poverty, the region continues to face many development challenges. Of these, rural poverty undoubtedly is the most daunting. Large numbers of people in the region remain poor: over 620 million people still live on $1 or less a day and about 1.9 billion people on less than $2 a day. Most of the poor continue to live in rural areas.
In East Asia and the Pacific, 93 percent of the poor live in rural areas while in South Asia, 75 percent of the poor live in rural areas. The number of rural poor living on less than $1 a day and less than $2 a day in East Asia and the Pacific and South Asia in 2002 at 625 million and 1,589 million, respectively. According to their estimates, about 70 percent of the world's extremely poor rural people are concentrated in Asia and the Pacific.
Over 2 billion people live in rural Asia, despite rapid urbanisation. As the numbers on poverty indicate, the economic growth in the past has brought only marginal benefits to a majority of rural people; therefore, rural underdevelopment remains a persistent problem in the region.
The seriousness of the rural underdevelopment problem further increases when other dimensions of development are taken into account. For example, evidence indicates growing disparities between urban and rural areas in both income and non-income dimensions of poverty. In addition, rural areas confront serious environmental problems, increasing the vulnerability of the poor in particular.
The current status of the rural economy and the overall quality of life of majority of the rural population suggest that neither the overall economic growth and development nor the growth and development in the rural economy have been inclusive. Increasing recognition of this situation has begun to generate a great deal of attention to inclusive growth in general and inclusive rural development in particular.
The paper draws from the experience of four sets of countries: Organisation for Economic Co-operation and Development (OECD) member countries; India and the PRC, two most populous countries that are growing rapidly in recent years and facing challenges of inclusive rural development and reducing rural-urban disparities; East Asian middle income countries such as Malaysia, Indonesia, and Thailand; and developing low-income Asian countries such as Bangladesh, Cambodia, Pakistan, and Viet Nam.
Promoting the capacity of poor and low-income households to participate in the growth process should be a central element of overall development strategy. The growth needs to create increasing employment opportunities particularly for the unskilled and semi-skilled labour in poor and low-income households. The pattern of growth is critically important for inclusive rural development.
The policy makers in most countries are concerned about the development gap between urban and rural areas and within rural areas. These differences (inter-sectoral, intra-sectoral, and regional) reflect two major factors: first is the divergence in sectoral growth rates between the rural economy and the rest of the economy and between different regions; second is the inequitable pattern of economic growth within the rural economy. Overall rural economic growth is a result of agricultural growth and the growth in the rural non-farm economy. Hence, it is essential to pay attention to both the agricultural and the rural non-farm economies to achieve higher growth rates in the rural economy. In addition, the pattern of growth in each sub-sector needs to be made more pro-poor to make rural development inclusive. Employment elasticity of growth remains a key factor.
Protection of the environment is critical. Rapid growth in some Asian economies has been associated with high environmental costs in terms of heavily polluted air, water, degraded land, and other natural resources. Ignoring environmental consequences has a far-reaching, adverse impact on the quality of life of rural people in general and poor households in particular because their ability to cope with such negative developments is severely limited. Negative environmental developments will also constrain overall economic growth in the medium to long term and hurt the rural poor.
The problems that are needed to be addressed are small farm holdings, inadequate land tenure security, and absence of dynamic land rental markets. Over the time, when production becomes increasingly sophisticated and more market oriented, farm size has to expand to accommodate the application of new technology. The scale economies tend to become more important when agriculture is shifting to high-value agricultural products in response to changing demand.
High population growth rates also put tremendous pressure on government budgetary resources and makes social development including provision of basic health services more challenging.
The third root cause is the inadequate physical and social infrastructure. Despite the need to increase such investments, the response of many Asian economies to this has been sluggish. Physical infrastructure deficiencies in rural areas need to be addressed not only to create economic opportunities for rural people in general but also to make economic growth and development inclusive and ensure that rural poor have better access to basic services that profoundly impact on their household welfare.
Business Recorder [Pakistan's First Financial Daily]
