THE ASIAN DEVELOPMENT BANK

Statement

by

Mr. Myoung- Ho Shin
Vice President

at the 
International Conference on Financing for Development

Monterrey, Mexico 
18th March 2002
 
 

"THE DEVELOPMENT CHALLENGES FACING ASIA "

We congratulate the United Nations, the Government of Mexico, and the organizers of the Monterrey Conference for a well-prepared and comprehensive agenda of discussions and for bringing together all the relevant stakeholders in the area of development finance. The Asian Development Bank as a development finance institution is pleased to be participating in the Conference.
 

The Developing Asia and Pacific Region

The developing Asia and Pacific region is the largest developing region in the world in landmass, population, and aggregate income. Its 3.2 billion people comprise over 70 percent of the developing world's population, but account for only 47 percent of the aggregate gross domestic product (GDP) of all developing countries. This is only slightly more than 11 percent of the GDP of the countries in the Organization for Economic Cooperation and Development.

The region as a whole has achieved unprecedented growth and development in the past three decades. This growth has been accompanied by a dramatic decline in the incidence of absolute poverty, significant increases in per capita incomes, and notable improvements in key social indicators. GDP per capita quadrupled in real terms between 1975 and 2000 in East Asia, nearly tripled in Southeast Asia, and doubled in South Asia. Life expectancy rose from 50 years to more than 62 years in South Asia and from 54 years to 67 years in Southeast Asia. Adult literacy rates rose in East and Southeast Asia from around 80 percent in 1980 to more than 90 percent today. In South Asia literacy rates increased from 40 percent to about 50 percent during the last two decades, and in some countries it is higher. These figures reflect a remarkable record of development for the region.
 

Continuing Development Challenges

However, notwithstanding these successes, almost two thirds of the world's poor live in developing Asia and the Pacific. While the vast majority of the poor are in the People's Republic of China and India, the incidence of poverty remains high throughout the region, especially in smaller countries. In South Asia, the actual numbers of poor people have increased since 1987, although the percentage of poor declined moderately during the 1990s. And while poverty has been greatly reduced in some areas, the 1997 Asian financial crisis reinforced the painful lesson that even gains made through many years of rapid and sustained growth can be all too quickly reversed. The Asia and Pacific region is thus central to the fight against global poverty.

Poverty reduction remains the central challenge in the region. Robust, sustainable economic growth is essential for significant gains in poverty reduction, for addressing the diverse problems of underdevelopment, and more generally for improvements in the quality of life. The countries of the region need to address these challenges of growth and sustainability in a systematic manner. Building and upgrading physical and social infrastructure throughout the region is a primary condition for robust, sustained growth, with large investments required in social services such as education, health, water supply, sanitation, and shelter, especially in the poorer countries. Ensuring the environmental sustainability of growth in the region's resource-based economies is essential for development and poverty reduction.
 

The Asian Development Bank and the Fight Against Poverty

The Asian Development Bank (ADB) is a multilateral development finance institution dedicated to reducing poverty in Asia and the Pacific. ADB has been contributing significantly to the economic and social development of the region and it has done so in an efficient and cost effective way. ADB remains committed to the ideals of its founders "to foster economic growth and cooperation in the region and to contribute to the acceleration of the process of economic development of the developing member countries, collectively and individually." However, to remain an effective institution relevant to the changing needs of the region, ADB has continually been adapting its priorities, assistance modalities, and organizational structure, and has transformed itself from what was essentially a project financier to a full-fledged development institution. In this context, ADB has identified three core areas of intervention in support of poverty reduction; these are sustainable economic growth, inclusive social development, and governance for effective policies and institutions. To broaden and deepen the impact of the core areas, three crosscutting themes have been identified; these are promoting the role of the private sector in development, supporting regional cooperation and integration for development, and addressing environmental sustainability. To ensure selectivity and focus of ADB's interventions at the country level, and to enhance the development impact and effectiveness of ADB's support to its developing member countries (DMCs), ADB uses four key operating principles; ensuring country leadership and ownership of the development agenda, taking a long-term approach to development assistance, enhancing strategic alliances and partnerships, and measuring development impact.
 

The Resources to Fight Poverty in Developing Asia 

The fight against poverty and the huge development challenges facing Asia and the Pacific will require the mobilization of considerable financial resources over the next 15 years. To an important extent, these resources will have to come first from the people and the governments of the DMCs themselves. Robust, sustainable growth will be necessary, hence policies to accelerate economic growth need to be reinforced; domestic resource mobilization, including tax efforts, must be enhanced; and the management and prioritization of public investment and expenditure must be widely improved.

The development experience of the Asia and Pacific region has shown that the private sector can contribute significantly to the generation of resources for development. To mobilize such efforts, reforms to remove market distortions, strengthen public institutions and governance, and develop efficient and transparent financial and capital markets must be pursued further at various levels throughout the countries of the region. With a conducive environment in place, external capital will supplement domestic private resources. However, access to international capital markets remains very unequal, being concentrated in few countries and, within these countries, only in more advanced regions. For the lower income countries, access to private external capital will remain very limited, while for middle and higher income countries, access will fluctuate and remain volatile.

The role of a regional development bank such as ADB will remain essential for mobilizing and catalyzing resources for the development of the DMCs, with the nature of this role varying with the level of development and capabilities of the individual countries. The availability of concessionary sources of financing through ADB will remain essential for the poorer DMCs, those with no access or limited access to foreign private funds, and weak domestic private sectors. Such financing will enable these poorer DMCs to respond to their development needs and help them significantly reduce poverty, while avoiding the burden of excessive debt. For middle income countries with limited international capital market access, and even for more advanced borrowers, ADB's role in financing development and catalyzing development finance will remain crucially important. In addition, ADB can help smooth fluctuations and volatility in access to international capital markets and provide longer-term finance for physical and social investment with long gestation periods. In these countries, ADB will retain the roles of mitigating sovereign risk and supporting more advanced policy and institutional reforms. Flexible degrees of intervention based on development levels and policy and institutional capacities are central to ADB's strategy.
 

Partnership for Development in Asia

ADB will strive to remain the premier development institution in the Asia and Pacific region. Toward this end, and in the fight against poverty together with the DMCs, ADB will work closely with other development partners to complement and build on one another's strengths. Based on its strategic agenda, ADB is ready to assume a lead role among partners in some sectors and in particular DMCs, but in a spirit of openness and complementarity with all other development partners. In selecting sectors and areas where ADB proposes to maintain a long-term focus and relationship, ADB will strongly emphasize, and is committed to, country-based coordination processes. Within the framework of country ownership, such enhanced coordination will ensure greater selectivity and focus on sectors and areas where development partners have strengths and advantages, or complementarities. Each potential partner can learn from the others' strength and knowledge, and ADB can thus enhance its development impact.
 

Measuring Developing Impact

The measure of success for ADB's strategy and activities is its impact on development in the region. To help assess this impact, ADB will develop performance benchmarks against which to measure the outputs of its assistance programs. The activities that ADB undertakes have short-term, medium-term, and long-term outputs and outcomes; keeping a long-term perspective is essential if the impact of ADB assistance is to be maximized. To ensure that the long-term focus of ADB programs is maintained, the impact must be evaluated systematically and the resulting feedback used to continually improve and enhance the effectiveness of ADB interventions.
 

Concluding Remarks

In conclusion, we note the recognition by the Monterrey Conference of the important role being played by regional development banks such as the ADB in serving the development needs of developing countries. We fully agree that strengthening the regional development banks will enhance ownership and the overall efficiency of the development agenda. As a partner in global efforts to move forward progress in poverty reduction, we will continue to address effectively and efficiently the development needs of the Asia and Pacific Region, and in this way contribute to the achievement of agreed international development goals, including the Millennium Development Goals.

We wish the Monterrey Conference every success in maintaining the momentum to face the challenges of a global development agenda.



Statements at the Conference
Conference News