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ADB and the ‘Development through Empowerment’ delusion

Posted on 7 May 2013

The same destructive policy imperatives remain in place

Asia has achieved remarkable economic growth amidst the troubled global economic landscape. It is projected to largely maintain its growth momentum in the next two years, with the region’s GDP expected to pick up to 7.3% in 2013 after it moderated to 6.9% in 2012.[1] Against this backdrop, however, the region remains home to two-thirds of the world’s “multi-dimensionally poor”[2] – half in South Asia (844 million people), and 15% in East Asia and the Pacific (262 million). Some 1.7 billion of its population live on less than $2 a day, and 828 million are struggling on less than $1.25 a day. The actual poverty rates in the region certainly go far beyond conservative estimates.
 
It is beyond dispute – Asia’s “rapid growth” is leaving hundreds of millions behind, causing a widening gap between rich and poor that threatens to undermine the region’s stability. Income divisions are rising markedly, with the share of income accruing to the richest households increasing over time. The Gini coefficient – a key measure of inequality, where a higher number represents higher inequality – has leapt from 39 to 46 in the last two decades[3], undermining the basis of growth itself.
 
Fair enough, the Asian Development Bank (ADB), the region’s premier multilateral financial institution, has repeatedly recognized the primacy of arresting this development problem. ADB’s Board of Governors Annual Meeting being held in India this May puts as its core agenda “Development through Empowerment”. ADB explains how widespread poverty and unequal income distribution necessitate public spending and service delivery, which are deemed ineffective without good governance.  
 
While ADB’s pronouncements seem unobjectionable at first glance, the clear disconnect between what it preaches and what it practices raises serious concerns about its objective to pursue development through empowerment. More so, its track record has proven how its policy imperatives have sought to undermine the basic human rights of millions of poor people in the Asia Pacific region.
 
ADB remains a market fundamentalist in its economic and development strategies. Its approach to poverty reduction and development continues to be hinged on the market fundamentals of rapid economic growth, export-oriented liberalization, financial deregulation, and widespread privatization of public services. All these have severely undermined countries’ sovereignty in determining their own development paths and have restricted people’s and communities’ access to essential services and resources. It has consistently pushed for development policies that have often protected private sector interests at the expense of people’s welfare. It has overhyped the importance of economic growth and enhancing GDP, forgetting that the real purpose of the economy is not to produce GDP but to increase the welfare of the entire citizenry.
 
This disconnect is manifest, for instance, in public-private partnerships (PPP) implemented by numerous countries in service delivery and infrastructure, often on the grounds that the PPP mechanism allows budget-strapped governments to shift the burden of capital spending to the private sector and contributes to enhanced efficiency in delivering services. However, the experiences of poor communities in the Philippines, Bangladesh, and
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