A panel of experts says extreme poverty could be mostly eradicated in East Asia by 2020, thanks to booming economic growth. Douglas Bakshian reports from Manila the experts say the Asian Development Bank, ADB, needs to shift its focus to operate effectively in this new world.
The Asian Development Bank's Eminent Persons Group paints a dramatic picture of Asia marching ahead as development brings prosperity.
A new report by the group of internationally known economists and financial experts says that in 1980 the Asia-Pacific region contributed about 20 percent of the world's gross domestic product. But by 2020, that will be 45 percent.
Poverty reduction has been substantial. In Asia, 19 percent of the population lived on one dollar a day in 2003, compared with 35 percent of the people in 1990.
East Asian developing countries have seen even greater gains. The report notes that in East Asia between 1990 and 2004 people with incomes of less than one dollar a day dropped by 300 million, to about 150 million. That is a decline in poverty from 29 percent to eight percent of the population.
To keep up with this growth, the panel says the Asian Development Bank, the region's main development institution, will have to radically transform itself.
The ADB, which was founded 40 years ago, has been involved primarily in development loans for impoverished countries. But now developing Asian nations hold more than $2 trillion in foreign reserves and many projects can be financed from within the region. To put that money to use regional financial networks, such as bond markets, must be created.
Supachai Panitchpakdi, the secretary-general of the U.N. Conference on Trade and Development, is the chairman of the experts panel. He says the ADB is vital to establishing a bond market.
"There is great need for the market to be established, for the framework to be established. And we see ADB as having the knowledge, [and] know-how to operate this market, and to give advice to governments so that they can together establish the kind of long term debt-instruments-market that can serve the region," he said.
Supachai says the ADB also should expand its role as the honest broker, or middleman, in designing regional projects that benefit many nations. For instance, the ADB supervised a Mekong River project that covers six countries - China, Burma, Thailand, Laos, Vietnam and Cambodia.
The ADB did most of the analytical work determining how to use the river, build bridges, and establish customs units. It also researched what benefits would result from the project, how they should be shared, and who should finance it.
Supachai says that thanks to the project, there is improved trade along the Mekong and cargo transportation has become more efficient and less polluting. He says the ADB can apply this model in other projects.
"I do think that economic integration in Asia will need to be backed up by sound economic analysis that an honest broker can do," he added. "Because you cannot ask anyone of the participating countries to do [this], because we do not want anybody to be saying that the report is tilted in [one] direction."
The report says sustainable development is another area for the ADB to focus on in the new Asia. As the region grows rapidly, there is heavy demand on scarce resources - energy, water, land and even clean air.
Supachai says the ADB can guide countries in cutting energy use and cleaning up air and water pollution.
The report also calls for more inclusive growth, so more people enjoy the prosperity created by the Asian economic boom. In China for instance, major cities and coastal areas are moving ahead, but development in the interior is lacking.
Caio Koch-Weser, the vice chairman of the Deutsche Bank Group, also sits on the Eminent Persons panel.
"There will have to be much more investment in the hinterland, moving up the Yangtze, moving into the less coastal areas," he explained. "And how do you do that? Infrastructure obviously, rural infrastructure, but also particularly education investment where China is not doing all that well yet."
The panel sees a challenging time ahead for the ADB, saying it will require far-reaching institutional changes and greater flexibility to operate in the new Asia.