Asia's increasing rich-poor divide undermining growth, stability -
ADB report
Asia's rapid growth is leaving millions behind, causing a widening
gap between rich and poor that threatens to undermine the region's
stability, according to a new report from the Asian Development Bank
(ADB).
"Another 240 million people could have been lifted out of poverty
over the past 20 years if inequality had remained stable instead of
increasing as it has since the 1990s," said ADB's Chief Economist
Changyong Rhee.
The Asian Development Outlook 2012 (ADO 2012) ADB's annual flagship
economic publication, says income divisions are rising markedly in the
region, where the richest 1 percent households account for 6 percent to
8 percent of total income.
Close to 20 percent of total income went to the wealthiest 5 percent
in most countries. The report shows that the share of income accruing to
the richest households has increased over time.
The Gini coefficient - a key measure of inequality - grew in the
region's three largest economies: People's Republic of China (PRC),
India and Indonesia. From the early 1990s to around 2010, it increased
from 32 to 43 in PRC, from 33 to 37 in India and from 29 to 39 in
Indonesia. Considering the region as a single unit, the Gini coefficient
has leapt from 39 to 46 in the last two decades.
Unequal access to education, health and other public services
contributes greatly to growing inequalities, further hindering
opportunities for the poor to raise their living standards. School
drop-out rates are up to five times higher for children in the poorest
families, while the chance of a poor infant dying at birth can be 10
times higher than those of a child born to a rich family.
"Inequality leads to a vicious circle, with unequal opportunities
creating income disparities, that in turn leads to dramatic differences
in future opportunities for families," Rhee said.
Highly uneven distribution of new technology, infrastructure and
investment is further fueling the divide, particularly between rural and
urban areas and coastal and inland provinces.
In PRC, rural-urban and interprovincial differences account for the
bulk of inequality.
Skill premiums have risen in many countries and better educated
workers are enjoying much higher income growth.
Technological progress favours capital over labour, with the share of
labour income in gross domestic product declining and that of capital
increasing in many countries.
The abundance of labour relative to capital in the region is also a
contributing factor to the declining labour income share, says the
report.
Governments need to focus on policy options for reducing inequality,
the report says.
These include the creation of quality jobs; increased spending on
education and health; and expanding social protection including
conditional cash transfers for the poor.
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