Tuesday, August 14, 2007

ADB report highlights widening gap between Asia’s rich & poor

New Delhi, Aug 8: Inequality is rising in most Asian countries, endangering the prospects of sustained growth and weakening social cohesion in these nations, the Asian Development Bank (ADB) said on Wednesday in its Key Indicators 2007 report. In India, too, the rich experienced faster growth in consumption expenditure than the poor since 1993, the time when pro-market reforms were initiated.

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Both relative and absolute inequalities have increased in most parts of developing Asia. While relative inequality is concerned with proportionate differences in incomes, absolute inequality is concerned with actual dollar differences in incomes.

In India’s case, the top ten percentile of the population tended to see the fastest growth in expenditure. The report states that if adequate data on income distribution in India were available, the increase in income inequality would have been much sharper than the expenditure inequality. However, it said the overall “social welfare has improved over time despite increasing inequality” in India.

In China, too, inequality has risen sharply, with the Gini coefficient (a standard measure of income inequality), increasing to 47.3 in 2004 from 40.7 in 2003—a level more typical of Latin America, the bank said.

The gulf between rich and poor showed up in other ways, too. For instance, India has a lower Gini coefficient, of 36.2, compared to China, but among its poorest families, as many as 28% of children are severely underweight compared with 5% for the richest households.

Further, while wages for English-speaking graduates are rising rapidly in India, bolstered by increasing opportunities that globalisation and pro-market reforms have offered, pay for unskilled labour is stagnating.

“Widening differentials in earnings of the college-educated vis-à-vis less-educated individuals appear to be the single most important observable factor accounting for increasing inequality,” ADB said.

However, the Manila-based bank said its findings did not mean Asia should turn its back on integration into the world economy.


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