Poverty in Asia: Is the Dragon Really Rising?
A complex, contrasted picture
Yet, East and Southeast Asia have made huge progress in terms of reducing poverty and developing economies. Right now, many of these developing countries look like post-war Europe in the 1950s: there is a lack of education, hygiene, infrastructure and extreme poverty is still visible and omnipresent.
Add problems of unemployment, inequalities, discrimination, corruption and you’ll see why the path to sustainable development is not all smooth. However, this path is not all rough either and much research is available (though not always accessible to everyone) on how to make it all the way to a sustainable future, rid of absolute poverty in Asia.
- Poverty in Bangladesh
- Poverty in Cambodia
- Poverty in China
- Poverty in Pakistan
- Poverty in the Philippines
Millennium Development Goals in Asia
The Millenium Development Goals (MDGs) are targets that were to become landmarks in the fight against poverty. They were set in 2000 and are to be reached by 2015. However it’s now become clear that most countries won’t reach the targets set by the UN. The MDGs aim at eradicating extreme poverty and hunger as well as achieving universal primary education and combating diseases such as HIV/AIDS and malaria, among the total 8 goals (that include 18 specific targets).
Unrealistic targets for poverty in Asia (and the world)
A lot of people have criticized the MDGs for being unrealistic and unachievable from the start. Even though this is entirely true, the initiative has been a real innovation in setting global targets. The criticisms should in fact be incorporated in such development goals so that we can make them more realistic and down-to-earth.
While, as a continent, Asia sometimes seems to be making good progress towards the MDGs, the fact is that the growth of countries such as China shadows the immense problems that other smaller countries are facing. Then, there is also the problem that looking at poverty in Asia is a very unsubtle approach: we neglect the fact the Asia covers radically different cultures, geographies and histories. Think about China, then India, then the Philippines, Cambodia, Uzbekistan and other small island states in the Pacific Ocean.
Lessons from the MDGs in Asia
In general East and Southeast Asian countries have been doing pretty well when fighting poverty in Asia whereas India (in the light of its current wealth) and Pacific island countries – among others – have lagged behind. The best lesson that MDGs have brought us remains their potential to raise awareness on global issues and raise funds from governments and NGOs worldwide.
By bringing this initiative, the United Nations have also contributed to making international aid more accountable and efficient via the MDGs’ need for results with limited resources. However the problem remains that awareness-raising is more difficult for smaller countries than for bigger ones. Hopefully, in this digital era, there is a potential to reduce this inequality in bringing media attention.
Isolated Pacific island countries
Neglected in the MDGs
Pacific island countries have been neglected by international organizations because of their small size and population. Even if the Millennium Development Goals have a universal purpose, it’s become clear that not everyone has received universal support. In other words, some countries have received much less attention than others and the fault is mostly due to our (naturally) biased perception of the world.
As a result, most of these countries won’t achieve the goals by 2015, but that’s not a surprise for anyone, as we expect most countries in the world not to achieve the MDGs. At best they will achieve a couple of them and after all it’s not that bad if a country manages “only” to eradicate hunger or offer universal education to its population.
Lack of data on poverty in Asia
The truth about poverty in Asia and the MDGs is that the goals must be tailored to each country and its context. Ambition is essential but so is pragmatism too. Then concerning the way the MDGs work, it seems that international donors and NGOs had better focusing on the most remote and poorest areas of Asia.
Rural villages are becoming more and more excluded from bigger cities and are difficult to access (and easily forgotten). There is no way these areas can achieve universal education, for the simple reason that many don’t have enough schools within reasonable distance. And there aren’t buses either bringing children from villages around to the nearest school.
All this reveals the massive lack of data on rural poverty in Asia. And that’s precisely because they have been neglected for so long that no one knows anything about these communities. This makes it difficult to know specifically which areas are most in need and exactly what they need. More research on the topic would be of great help to donors and international agencies in showing how widespread the problem is.
The rise of the Asian myths
Reality and myths about India’s rise
Despite the ups and downs in GDP growth during the crisis, there is definitely an “India myth” about the country’s marvelous development trajectory that leapfrogged degrading manufacturing and low-skilled workers. While this is somewhat true, what this myth doesn’t say is that by leapfrogging the industrial stage of development, India also leapfrogged millions of low-skilled workers and left them behind. That’s why today India makes for a huge share of poverty in Asia with its roughly 40-50% of the population living in poverty. In the end, only very few Indians have been able to reap the benefits of modernization and globalization.
In order to create a job for everyone, India would have to develop its agriculture, tame rich farmers who absorb whimsical subsidies and exploit poorer ones, but also completely reform its property right system and renovate its infrastructure. Simply put, there’s still hell of a job to do: an industrial revolution. And real reforms of its institutions.
What about China?
China’s economy is about three times the size of India’s and its infrastructure is incomparably more developed, so there is no doubt that both countries play in a different league. However does it mean that China is ready to take over the world?
Not really. Of course the country has now the means to protect its own economic interests in the world, just like most developed countries do. But inequalities and poverty in China are still a huge problem and corruption is pandemic. From 90,000 mass incidents per year in the late 2000s, riots and clashes with local authorities have risen to 180,000 each year since 2010 (according to Beijing’s official statistics bureau).
So, as you can guess, the focus right now is more on maintaining stability and on dealing with corruption and inequalities – particularly because the government has been promising economic prosperity to everyone for two decades.
Development issues in South Asian poverty
The impact of social order on poverty in Asia
It’s hard to talk about poverty in South Asia (mostly India) without talking about Amartya Sen – one of the most important academics and researcher on the topic. The way he saw it – along with anyone else with common sense – poverty in the region is mostly caused by incompetent or weak politicians who are unable to tackle a society and its unfair system.
Of course, changing an entire social order and social structure isn’t an easy task but many countries did it. The truth is that even when there are strong-willed policy-makers or reformers, they lack the political and economic means to do anything. Most of the time corruption will take care of them one way or another (e.g. directly bribing the person or his superior).
Unequal development and resistance
The situation is such that South Asia is home to the largest number of poor people in the world. While India is often described as the biggest democracy in the world, it’d be more accurate to say it’s one of the most corrupt and unequal countries in the world. The 100 richest people in India possess the equivalent to ¼ of the country’s GDP in assets. How’s that for inequality!
It’s no surprise that communist-maoist movements are on the rise in India, where people see their houses destroyed and their land seized overnight by local officials and real estate developers. It becomes hard to see the difference between capitalism and communism when you experience something like that. All this shows how important it is to build institutions that defend the rule of law and citizens’ basic rights to housing and education (among other good things).
Democracy and poverty in the South
Throughout South Asia (starting with India), there has been an obvious failure of democracy’s promise of empowering people. Instead, South Asia has maintained its unfair institutions and social order so that the democratic game was rigged from the start. Instead of being actors of politics, citizens in South Asia have been turned into the clients of the powerful elite who takes turn in seizing power at each election.
Power in South Asia is still very much a matter of chance: either you were born in the right family or you weren’t. Getting lucky and grow up in the right caste of class still determines not just your political power but your economic prospects one too. That’s why the right agenda for ending poverty in Asia must focus on overthrowing the power balance and the institutional discriminations it creates. This is not to say that no progress has been made in reducing poverty in Asia, but simply that going further will require deeper change. This doesn’t mean either that all the elite should be beheaded, but simply that average citizens must gain in freedom and power over their own lives so that they can participate in their society.
Poverty reduction programs
Human capital and growth
There are several programmes aimed tackling poverty in Asia. Mostly they include increasing growth rates via macroeconomic stability (e.g. inflation, currency), government spending (infrastructure) and foreign investment; but also developing human capital via investment in health and education.
However, too many South Asian countries do not understand how important it is to educate the whole population rather than a small elite. They completely ignore the economic impact of reducing poverty in Asia and the difference it would make within their own societies. Such short-term approach is sometimes officially recognized in the case of poverty in Bangladesh for example, where the government has acknowledged the huge lack of funding for primary public services.
The problem is then that international programmes across Asia don’t go beyond supporting NGOs and local budgets. In other words there is no set target and there is not enough focus on accountability and results concerning what is going in schools and hospitals.
The need for tailored solutions
You want specific numbers? Countries such as Cambodia and Bangladesh have among the lowest public spending on education in the world with about 2% of GDP, while the average worldwide tends to be around 4-5% of GDP – i.e. twice more investment on education. These countries also have to grapple with sky high levels of adult illiteracy, which implies a whole different strategy than just relying on traditional schools.
There is definitely a need for adult education programs and public messages promoting them… the right way. Only a few years ago in Southern China (near Cambodia), you could see on the side of the road massive advertisements with happy farmers exhorting you to “Learn To Read”. Obviously, if you don’t know how to read, you’ll have issues deciphering this message and the letters on the advertisement board. In this particular case, radio or TV would be better channels for promotion…
Class inequality and tensions
It’s become clear to many countries that enormous class inequalities and absolute poverty in Asia are driving tensions and clashes within the society. This is particularly true for poverty in Pakistan where a small elite is capturing the bulk of public services – be it education or health. The poor are increasingly at odds with the government as they face unemployment and diseases such as tuberculosis, hepatitis B, polio and malaria.
Only Sri Lanka seems to be trying more ambitious changes concerning efficient welfare, universal education and introducing more modern equipment in its health system. Only time will tell if these reforms are successful.
Upcoming challenges and solutions
Growth and poverty in Asia
Across Southeast Asia, from Thailand to Lao and the Philippines, there has been undeniable progress in reducing poverty. The experience in countries such as Thailand, Indonesia and Malaysia shows that growth in agriculture and services has been fundamental to tackle poverty, but that growth in industry didn’t have much impact.
In Thailand and Malaysia, the comprehensive development of a service industry has even had a bigger impact than agriculture on lifting local out of poverty. A developed service sector will indeed bring a certain variety of jobs – not just in IT – but also in hotels & tourism, catering, retail sales and so on. However, it’s also thanks to the modernization of agriculture that these countries were able to free enough labor that went into the service industry.
An aging population
In Asia, older people are particularly at risk of all sorts of poverty: illness, social exclusion, lack of pension system, lack of job opportunities, lack of social assistance. But these people also represent a challenge for the development of the continent itself. It’s not just a problem of poverty in Asia anymore, it’s becoming a potential barrier to the further development of huge countries like China.
Asian countries obviously need to reform their social security system according to either their own financial capabilities. On one side, we’ve got people who live longer lives and would like to enjoy basic living conditions - stuff like running water, electricity and a shelter. On the other side, we’ve got governments that haven’t planned that people could actually live longer and ask for a decent life at the same time. Obviously the problem is more with creating an entire social security system out of scratch for countries that were well under-developed a couple of decades ago. It’s a whole learning process. And there is also to understand that markets and institutions must as well cater for the needs of the older population, which are very different than those of a very young population.
Micro-credit: the solution to poverty in Asia ?
Microcredit has become so trendy these days, I can’t but mention it. It’s actually been used for providing small loans and training to older people in order to teach them new skills that would make them better able to find a job. The question of “when is it decent to retire?” still remains up in the air, though. But at least a few microcredit programs have shown that older people make reliable “clients” and are able to adapt to changes.
Despite the enthusiasm for microcredit, many experts realize we don’t know as much as we should about the real impact of this strategy and how cost-effective it is compared to other programmes. If you’re looking for a good research topic, serious data and analysis is very much sought after information.
Microcredits and the bottom billion in Asia
The few rigorous studies made on how microcredit tackles poverty in Asia, however, do point out interesting things. Reaching the bottom billion (poorest of the poor) is just as difficult with microcredit as it is with usual financial or anti-poverty programs. After all the same problems have remained, namely finding and reaching these excluded populations who are also considered high risk investments.
So, how do you help them? Ideally, they should be able to get some sort of support services on top of their credit so as to provide some sort of safety net. Clever businessmen (or governments) will see that it means long term vision and long-term clients. By offering them support services - e.g. financial or business advice, guarantees – you not only make sure they reimburse their microcredit, you also win long term clients who will most likely have ever bigger needs and new business ideas to get out of poverty.
Of course, some microcredit programs aren’t financially sustainable and that’s why better data and studies are needed. This would help calculate the overall economic gain that lifting millions of people out of poverty would represent. In the end, what we do know is that microcredit at least works very well with the slightly better off poor. This is surely enough of an argument to use this strategy in a targeted manner. So, even if it's ever proven that microcredit doesn't help the bottom poor, we'd still know it's one useful tool to fight "non-extreme" poverty in Asia.
- Achieving the Millennium Development Goals in the Asia-Pacific Region: The Role of International Assistance, Simon Feeny and Matthew Clarke, Asia Pacific Viewpoint 2008
- Agents into Principals (Democratizing Development in South Asia), Rehman Sobhan, Arguments for a Better World: Essays in Honor of Amartya Sen 2009
- Three Asian Myths and the Global Economic Crisis, Razeen Sally, Institute of Economic Affairs 2009
- Critically Understanding Asian Perspectives on Ageing, Vandana Desai & Matthew Tye, Third World Quarterly 2009
- Economic Development and Poverty Reduction in Korea: Governing Multifunctional Institutions, Huck-ju Kwon and Ilcheong Yi, Development and Change 2009
- Africa in Asia? The Development Challenges Facing Eastern Indonesia and East Timor, Anne Booth, Oxford Development Studies 2004
- Regional Economic Integration and Its Impacts on Growth, Poverty and Income Distribution, Nguyen and Ezaki, The Applied Regional Science Conference 2005
- The Value of Networks in Enterprise Development: Case Studies of Eastern Europe and Southeast Asia, S. S. Morris, W. P. Woodworth & S. R. Hiatt, Journal of Developmental Entrepreneurship 2006
- Foreign Direct Investment and Poverty in the ASEAN Region, H. Jalilan & J. Weiss, ASEAN Economic Bulletin 2002
- Mainstreaming Fisheries in Development and Doverty Reduction Strategies in the Asia-Pacific Region, Chris Reid, Andy Thorpe and Simon Funge Smith, Journal of the Asia Pacific Economy 2008
- Managing Food Price Instability in Asia: A Macro Food Security Perspective, C. Peter Timmer and David Dawe, Asian Economic Journal 2007
- Globalization and Poverty: Impacts on Households of Employment and Restructuring in the Textiles Industry of Vietnam, J. Thoburn et al., Journal of the Asia Pacific Economy 2007
- Revisiting Growth and Poverty Reduction in Indonesia: What Do Subnational Data Show?, A. Balisacan et al., Bulletin of Indonesian Economic Studies 2003
- The End of the Rollercoaster? Growth, Inequality and Poverty in Central Asia and the Caucasus, Jane Falkingham, Social Policy & Administration 2005
- New Information & Communication Technologies And Poverty: Some Evidence from Developing Asia, M. G. Quibria et al., 2002
- Institutional Change and Innovation Capacity: Contrasting Experiences of Promoting Small-Scale Irrigation Technology in South Asia, A. Hall et al., International Journal of Technology Management and Sustainable Development 2007
- Great Expectations: Microfinance and Poverty Reduction in Asia and Latin America, J. Weiss & H. Montgomery, Oxford Development Studies 2005
- Effect of Payments for Health Care on Poverty Estimates in 11 Countries in Asia, E. van Doorslaer et al., The Lancet 2006
- Poverty and Livelihoods after Full-Time Farming: A South-East Asian View, Jonathan Rigg, Asia Pacific Viewpoint 2005
- Poverty and Growth in Southeast Asia, Peter Warr, ASEAN Economic Bulletin 2006
- Giants Old and New: Promoting Social Security and Economic Growth in the Asia and Pacific Region, Robert Walker and Sony Pellissery, International Social Security Review 2008
- The Road to Pro-Poor Growth: Indonesian Experience in Regional Perspective, C. Peter Timmer, Bulletin of Indonesian Economic Studies 2004
- An Overview of Rural Development in Asia, Durga P. Paudyal, Asia-Pacific Journal of Rural Development 2007
- Introduction to the Special Issue: Spatial Inequality and Development in Asia, Ravi Kanbur, Anthony J. Venables, and Guanghua Wan, Review of Development Economics 2005
- Issues and Policy Directions for Sustainable Development in Asia through Trade, Kenichi Imai, International Review for Environmental Strategies 2002
- Technology and Institutions in the Process of Economic Reform: Achieving Growth with Poverty Reduction in South Asia, John Adams and Hans-Peter Brunner, Journal of Economic Issues 2003
Have your say about what you just read! Leave a comment in the box below.