The Asian Development Bank's chief economist is warning that the gap between rich and poor is widening in Asia, where 60 percent of the population still lives in poverty. The economist, Ifzal Ali, says this condition is unacceptable, but he believes increased globalization and foreign direct investment will help Asia's underprivileged.
Ifzal Ali says the spotlight should be shifted from the high growth rates for Asian economies to the majority of the region's people, who still live in poverty.
Speaking to reporters in Tokyo Wednesday, the Asian Development Bank's chief economist said South Asia's growth rate is now almost on par with East Asia's. But he said not enough is being done in either region to keep the gap between rich and poor from widening.
This has resulted, he says, in simultaneous beacons of hope and symbols of despair in such cities as Mumbai and Manila, where the well-off reside in luxury high-rise buildings alongside impoverished slum residents.
Ali is a proponent of special economic zones, where corporations are given tax breaks and other inducements to set up industries. This is a politically sensitive issue in Ali's native India, where it is alleged that farmers are being forced off their land for the benefit of multinational corporations.
But Ali says special economic zones have 10 times the value of agricultural land, because of the number of jobs created by the industrial and service sectors. "You are calling it 'ghettos for the privileged,'" he said. "I would call it the creation of the islands of excellence, which will become a beacon of hope that will lead to the mainstreaming of these islands of excellence throughout the country."
Ali said increased interest by Japanese corporations, combined with Tokyo's legacy of official development assistance (ODA), is another way of reducing the wealth disparity in India. "There is tremendous opportunity for the Japanese corporations to invest in India," said Ali. "Japan has historically had a very active ODA program with India. So I think the challenge is to have a juxtaposition of ODA with private investment which will be beneficial for both countries."
The Manila-based lending institution last month raised its forecast for this year's growth in Asia to 7.7 percent from 7.2 percent, mainly due to the continued expansion of the Chinese and Indian economies.
The ADB's Board of Governors on Tuesday announced that Japanese economist and former vice finance minister Haruhiko Kuroda had been re-elected for a second five-year term as the bank's president.