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Rising inequalities in income and access to employment and social services in Asia are casting a shadow over its unprecedented economic boom, and governments and the private sector need to work together to make the benefits of growth more inclusive, says a new book from the Asian Development Bank (ADB).

Poverty, Inequality and Inclusive Growth in Asia: Measurement, Policy Issues, and Country Studies, edited by Juzhong Zhuang, Assistant Chief Economist in ADB’s Economics and Research Department, examines the growing discrepancies in wealth and persistent gaps in access to social services that have emerged during Asia’s extraordinary economic expansion in recent decades, and lays out policy options to address inequities and support inclusive growth.

Over the past 20 years, the region’s per capita gross domestic product has expanded almost three-fold, with the percentage of people living in extreme poverty ($1.25 a day or less) nearly halved. At the same time Asia is still home to two-thirds of the world’s poorest people, while in a large part little progress has been made on key social indicators, such as child and maternal mortality rates. Despite market liberalization and globalization creating new wealth and economic opportunities, inequalities in both income and non-income indicators have widened in many countries, particularly between large urban centers and the countryside.

“Developing Asia’s stellar growth rates have masked rising inequality, leading to two faces of Asia – one shining and the other suffering,” said Mr. Zhuang. “Merging them will be a development challenge for many years to come. Inclusive growth with its focus on creating economic opportunity and ensuring equal access will play a pivotal role in narrowing the gap.”

The book – which draws on research papers carried out by ADB economists and their collaborators – looks at recent trends of income and non-income inequality and poverty in the region; discusses the underlying driving forces; examines the concept of inclusive growth; and provides in-depth analysis of key policy pillars of an inclusive growth strategy, including employment, access to public services, social protection, and governance and institutions. The book also includes six country studies presenting detailed information on growth, poverty, and inequality dynamics in the People’s Republic of China (PRC), Nepal, the Philippines, Thailand, and Viet Nam.

It says an effective inclusive growth strategy needs to focus on high growth to create productive jobs, social inclusion to ensure equal access to opportunities, and social safety nets to mitigate risks and cushion the most vulnerable groups. To do this, governments should address existing policy, governance and institutional weaknesses, promote social inclusion, and invest in, and improve access to, basic services.

“Fighting poverty and inequality by focusing public policy on improving delivery of basic health care and education services, especially to the disadvantaged, strengthening social protections and significantly increasing the productive employment opportunities of a wide population should be a minimum agenda to which developing Asia’s policy makers must commit,” said Mr. Zhuang.

The book notes that many economies in the region, including India and PRC, recognize the potentially negative social, economic, and political consequences of increasing inequality in access to economic opportunity, and are now embracing inclusive growth as the central element of their development plans.

Developing Asian economies need to make growth more inclusive and sustainable with less income inequality and environmental degradation, says a forthcoming book by the Asian Development Bank (ADB) and the Asian Development Bank Institute (ADBI).

The book, Rebalancing for Sustainable Growth: Asia’s Postcrisis Challenge, argues that Asian economies export-led growth model, which was so spectacularly successful in Asia in earlier decades, has significant limits. Asia now needs to rebalance growth by adopting policies to promote a greater reliance on domestic and regional demand. Balanced growth, the book says, means growth that is consistent with smaller global imbalances and is less dependent on exports, as well as growth that is inclusive and environmentally sustainable.

“Although Asian economies have begun to recover from the global financial crisis, the longer-term implications of the crisis for Asia are perhaps even greater than the short-term ones,” said ADB Vice-President Laurence Greenwood, who introduced the book at ADB’s 43rd Annual Meeting in Tashkent. “The period of rapid Asian export growth was, at least in its later stages, accompanied by a sharp worsening of global payments imbalances, which contributed to the global financial crisis. Asia’s future growth path needs to avoid such large and risky imbalances.”

Mr. Greenwood said that the aftermath of the global financial crisis provides an opportunity to correct distortions and develop policy measures to support more balanced and sustainable growth.

Some of the book’s key recommendations to achieve these goals include:

• Establish an effective framework for monetary, macroprudential, fiscal, and exchange rate policies
• Deepen social protection to support social resilience
• Increase infrastructure investment to create a “seamless Asia”
• Enhance productivity in the services sector
• Establish a region-wide free trade agreement to encourage intraregional trade and investment
• Promote a shift to a low-carbon society and support green growth, and
• Deepen and integrate the financial markets to facilitate the recycling of Asia’s high savings for investment within the region.

“This new development paradigm for Asia could enable the region to not only remain the world’s factory of manufactured products but also become a more important source of global demand,” said Masahiro Kawai, Dean of ADBI. “A stronger, balanced, and more resilient economy, with multiple sources of growth, is a foundation for a prosperous Asia and at the same time provides benefits to the global economy.”

Tokyo-based ADBI, which is a subsidiary of Asian Development Bank, was established in 1997 to help build up knowledge on poverty reduction and actions needed to support long-term growth in developing economies in Asia and the Pacific.