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Development Organizations Say Asia Could Wipe Out Extreme Poverty

Two new reports by international financial institutions say extreme poverty could be eliminated in Asia by the year 2020. Claudia Blume in Hong Kong looks at the reasons for the optimism, and the challenges that remain.

Asia is home to two-thirds of the world's poor. Every fifth person in the region lives in extreme poverty - commonly measured as income below one dollar a day. In India, Bangladesh and Cambodia, more than 30 percent live below the poverty line.

But the region has made enormous progress in the past two decades. Although 35 percent of Asians lived below the poverty line in 1990, the figure dropped to 19 percent in 2003. Developing countries in East Asia were most successful, with the rate dropping from 29 percent to just eight percent in the same period.

The United Nations Economic and Social Commission for Asia and the Pacific says China alone moved 150 million people out of poverty in the past decade.

Ravi Ratnayake, director of UNESCAP's trade and investment division, says the region's economic growth is the most important reason poverty rates are dropping.

"The region as a whole recorded 7.9 percent GDP [gross domestic product] growth in 2006 and [in] China, GDP growth has over the past few years been over nine percent to about 10 percent, and similarly in India nine percent," said Ratnayake. "So many countries in the region are doing really well in terms of economic growth and obviously some benefits of the economic growth are going to poor people in the poor communities."

There are other factors. Shiladitya Chatterjee, head of the Asian Development Bank's poverty unit, says limiting population growth can play an important role.

"The countries which have been successful in reducing population growth, for example, have succeeded better than others," said Chatterjee. "For example, China, Indonesia has done that. And they have seen very fast reduction in poverty compared to, let's say, India."

Chatterjee says in some countries that have seen rapid population growth, such as Bangladesh, there has been an increase in the absolute number of poor people - even though the proportion living in poverty declined.

Chatterjee also says that being poor is not just a matter of having a low income. It can mean a lack of access to services - such as education, health, sanitation and water - and a lack of political participation. In this respect, Asia's track record has not been so positive.

"While Asia's record in income poverty has been remarkable and extraordinary, our record in terms of non-income poverty, while it has been good, has not been as impressive," said Chatterjee. "There are still large numbers of people living with major deprivations, human deprivations, and we are concerned that we are not making as much progress."

In some countries, the benefits of economic growth have not reached the poorest people. Inequality remains a major problem, particularly the growing income gap between urban and rural populations.

Poverty experts, such as UNESCAP's Ratnayake, say governments need to make sure the poor enjoy the benefits of growing economies.

"We need to look at not only the pace of economic growth but also the pattern of economic growth so that [the] poor proportion of the population [is] getting more than [the] non-poor proportion of the population from [the] high economic growth in these countries," said Ratnayake.

He says overall the region is moving in the right direction, with countries such as China and Vietnam introducing successful poverty-reduction programs.

A recent report by the Asian Development Bank predicts that extreme poverty could be eliminated in Asia by 2020. The non-profit lender also expects several countries in the region to become donors to their poorer neighbors - something China has already started to do.

South Asia faces a bigger challenge, but a separate report by the World Bank says the region has a chance of attaining single-digit poverty rates within a generation. Shekhar Shah is economic adviser for the World Bank's South Asia region.

"Now you ask - how can we make such a claim or put forward such an ambitious proposal," said Shah. "I think for a variety of reasons, but principally because economic growth is creating a political space for much-needed policy and institutional reforms, both to accelerate this growth and to sustain it and then going on from there to be able to tackle the other aspects of poverty and deprivation in South Asia."

Poverty experts agree that the region needs to accelerate and sustain economic growth to further reduce poverty. But this alone is not enough. Challenges remain.

Experts say inequality in growth must be addressed, particularly the issue of lagging sectors such as agriculture, and the poorest regions, such as India's state of Bihar. Countries need to expand opportunities for the poor - for example through better regulation of labor markets and the creation of jobs for the rapidly growing labor force in many countries.

There are also continuing challenges of human development - such as providing adequate health care and education. Shah of the World Bank notes that poor governance, corruption and conflict also hurt anti-poverty efforts.