An Asian Development Bank (ADB) study report has said persistent inequality can impede growth prospect and sustainability in the Asian nations.
"Concerns over rising inequality, the environmental costs of the current pattern of economic growth, and the dangers of climate change are at the forefront of the emerging issues that are shaping a new development path for the region," said the study report titled 'Inclusion, Resilience, Change: ADB's Strategy 2020 at Mid-Term', released Tuesday.
The study has reviewed ADB's development strategy, which runs from 2008 to 2020, at the halfway mark. Experts from the United Nations and the European Union and senior government officials from Asia contributed to the review.
The evaluation team of the Manila-based lender in its report said economic growth in developing countries in Asia since the early 1990s has been remarkable, but not inclusive.
"Poverty, disparities, and other challenges remain pervasive. The region is still home to three-fifths of the world's undernourished and has the largest number of poor and deprived people. Inequality has grown across most parts of the region and is now more pronounced in Asia than in most other developing regions," it said.
ADB estimates that infrastructure alone (across all sectors) made up some 67 per cent of approvals in 2003-2007 which increased to 72 per cent during 2008-2012. "While infrastructure can promote inclusive growth, this cannot automatically be presumed."
In the face of the growing challenges of socially inclusive and environmentally sustainable growth in Asia and the Pacific, the ADB needs to strengthen the impact of its operations on these two vital aspects of development, said the Independent Evaluation report, assessing the ADB operations.
As many countries in the region grapple with rising income inequality and worsening environmental conditions while striving to maintain strong growth, the expectations of governments and businesses for ADB's support are at an all-time high, said the independent evaluation report.
"Amid ADB's great strengths, there's an important gap to be addressed in gearing the institution's operational priorities more squarely with its strategic agenda for inclusion, sustainability and regional integration", said the Independent Evaluation's director general Vinod Thomas.
He said: "Immense development benefits could result from such a shift that supports social inclusion more directly through job creation and improving livelihood, and furthers environmental care and climate action, while generating high growth".
Income inequality is widening in the 12 countries that make up 80 per cent of the region's population, which in turn is weakening the impact of growth on reducing poverty and could threaten social cohesion, the ADB report said.
Given ADB's emphasis on providing financing support for infrastructure projects, which accounted for 72 per cent of its total loan portfolio of just over $65 billion during 2008-2012, the study urges ADB to promote inclusion by stressing projects that especially benefit lower-income and vulnerable groups, including women.
