1 Final: 7 September 2011

SOCIAL DIMENSIONS DETERMINE THE QUALITY OF INCLUSIVE GROWTH

Introductory Remarks for the 5th China-ASEAN Forum on Poverty Reduction and Social Development (14 September 2011, Jakarta, Indonesia)
by Ursula Schaefer-Preuss, Vice President for Knowledge Management and Sustainable Development, Asian Development Bank

Honorary Minister Mr. Laksono from the Indonesia Coordinating Ministry of Peoples Welfare, Honorable Chairman of the China Association for Poverty Alleviation and Development, Mr. LI Jinhua, UNDP Administrator, Ms. Helen Clark ASEAN Deputy Secretary General, Mr. Sayakane Sisouvong, Distinguished Guests, Ladies and Gentlemen:

Congratulating to the key organizers of the Forum On behalf of the Asian Development Bank, I wish to thank the Government of Indonesia, the ASEAN Secretariat, the Government of the Peoples Republic of China, and the International Poverty Reduction Center in China (IPRCC) for organizing this important event. It is an honor for ADB to be a co-sponsor of this China-ASEAN Forum. Today is the 5th in a series of China-ASEAN Fora on poverty reduction and social development. These events have taken on important and timely topics, ranging from free trade and poverty reduction to food security and disaster management. Such topics are fully aligned with ADBs work on poverty reduction and inclusive growth. For example, in 2009, the Forum discussed the social impacts of global financial crisis and policy responses, complementing a major ADB conference on a similar theme. Similarly, todays focus on quality of growth aligns well with yesterdays ADB-ILOIPRCC workshop on the social policy agenda in middle income countries. Our participation in this Forum is an important means of sharing knowledge for the mutual benefit of all of us.

2 Quality of growth in ASEAN plus countries More to the point, quality of growth for poverty reduction is a timely and highly relevant issue in the region today. There are three reasons: First, Asia has confidently rebounded from the economic turmoil of 2008-2009 and is now

a major contributing force to the global recovery. Second, for many Asian countries the last decade has brought a massive increase in per

capita GDP. And those countries are now actively addressing the challenge of avoiding the middle income trap. And third, Asia's recent development experiences underscore the importance of inclusive

growth. In my view, inclusive growth not only makes economic growth quantitatively stable, it also promotes our shared aspirations for a decent quality of life for all. This can be achieved. However, there is no automatic trickle-down from high growth to inclusiveness and poverty reduction. Rather, for growth to be inclusive, it must expand employment opportunities for lower income groups, provide equal access to social opportunities and human development, and offer social protection systems to build individual and collective resilience against life events and economic and climate induced risks and shocks. I must emphasize that inclusive growth is therefore not just about having high growth coupled with social policy actions. It is rather a specific pattern and path of growth that is actively driven by lower income groups, and that especially benefits excluded or vulnerable citizens.

Social dimensions of inclusive growth in Asias middle income countries Yesterdays pre-Forum discussions on the social dimensions of inclusive growth in emerging Asias middle income countries were quite interesting: I wish to highlight a couple of insights arising from those discussions. (a) First, the workshop specifically highlighted the need for middle income economies to create many more decent, productive and well paid jobs with social security entitlements. (b) Second, the workshop suggested that middle income status means that governments have more resources to spend on health, education and urban services. Demographic transitions; urbanization and migration; and rising health, education and old age costs for the poor also imply that governments contribution to social spending and improvements in peoples habitat and environment has to increase.

3 (c) And third, inclusive growth also means enlarging the social protection agenda to provide sufficient and relevant health insurance and pensions for all, but especially for the lower income groups below the $4 international poverty line. There were two additional side discussions, which I found interesting too: (a) Comparisons were made to developments in Latin America in the last decade. They showed that committed governments can reduce inequalities and maintain growth by accelerating investments in active labor market policies (including higher education and skill development for the poor); broadening social protection schemes for all particularly to cope with rising old age care and health costs; and improving the living environments of the poor, especially in cities, which are the driving forces of growth in Asia. (b) There was also a discussion on middle income countries in the region taking on new responsibilities in helping their low-income neighbors. The workshop pointed out, however, that such new development aid should promote not only trade and large scale infrastructure investments, but also social development, poverty reduction and inclusive growth.

Inclusive growth in ADB These are areas in which the Asian Development Bank has a long and solid track record. ADBs Poverty Reduction Strategy, adopted in 1999, provided a basis for our new corporate Strategy 2020, which holds inclusive growth as one of three key pillars, along with environmentally sustainable growth and regional cooperation and integration. As a bank, ADB has at its disposal very useful instruments to promote economic growth. As a development institution, working in partnership with governments, other donors, the private sector and civil society, we are committed to making the regions high growth more inclusive, especially the poor and vulnerable, so many of whom are young people, women and girls.

Closing statement: On behalf of ADB, I once again thank you for this opportunity. We look forward to continued collaboration with all our partners on the inclusive growth agenda. And I am personally looking forward to stimulating discussions on this topic. I wish the Forum a great success.