Asia's economies: Growth now, equity later

Asia's economies: Growth now, equity later

By Johanna Son

MANILA: Asia's surging economies are pressing ahead with liberalization and reforms aimed at spurring growth, but they still see concerns about equity and the social ill-effects of growth as secondary issues.

This conclusion runs through the reports on social development in four Asian countries -- India, Indonesia, Malaysia and the Philippines -- prepared by local activists in the 1997 `Social Watch' report.

Released last week, the report is the first yearly assessment by non-government organizations of how countries are complying with commitments made at the Social Summit and Fourth World Conference on Women in 1995.

It notes that Asia's growth rates continue to impress many, adding that East Asia's progress in the last three decades is often lauded as having worked because it was broad-based and created jobs for citizens.

But it is also well known that Asia has the most number of the world's poor. India has the biggest number at 350 million, but Bangladesh has the largest proportion of the poor at 80 percent of its population, compared to India's 40 percent.

Virtually all countries are seeking to open their economies in order to become competitive in the world market. But "it is now commonly accepted that poverty cannot be reduced by economic growth alone," the `Social Watch' report pointed out.

But while that premise is accepted by governments, their pursuit of free-market growth tends to bring side effects such as income inequalities, abet women's low status in society and economy, social injustice and alienation.

A country may post record growth rates, but that does not mean income gaps are closing as fast.

In the aspiring tiger economy of Malaysia, the lowest 20 percent income group gets 4.6 percent of total income while the highest 20 percent corners 53.7 percent. In Thailand, the lowest 20 percent gets 6.1 percent of income, and the richest 20 percent gets 50.7 percent share.

In Hong Kong the richest 20 percent gets 8.7 times more in income than the poorest 20 percent, in India and Pakistan 4.7 times and in China, 6.5 times.

"Though the incidence of absolute poverty has decreased, there is a growing concern about the rising inequality in the country in terms of distribution of wealth and income in society," Meena Raman of Consumers Association of Penang said in report on Malaysia.

She concedes that Malaysia's growth has cut poverty incidence from 16.5 percent in 1990 to 8.9 percent in 1995.

But figures show incomes have been growing at a slower pace for the poor than for the rich. Sizable gaps also exist between the rural and urban economies and between peninsular and eastern Malaysia, where many indigenous peoples live.

Rahman says Malaysia's growth is unsustainable: "What is undesirable is the type of growth that is taking place on the foundation of an unequal distribution of resources, wealth and income."

Indonesia is a success story in cutting poverty incidence from 60 percent in 1970 to 13.67 percent in 1993. But Lefidus Malau of the women's resource center Kalyanamitra says national economic growth is not always followed by an improvement in living conditions.

Malau argues that the minimum income used as a yardstick by the Indonesian government is too low, which means the figure of the real poor is a majority or even 90 percent of the population.

Among the clearest indications of poverty, the Indonesian report said, is the country's maternal mortality rate, which the UN puts at 650 per 100,000 people. Malau says that figure is 65 times higher than Singapore and eight times that of Malaysia.

In the Philippines, the government is proud of both the country's healthy growth rates in recent years as well as its `social reform agenda' aimed at helping marginalised groups who have yet to take advantage of that growth.

But Antoinette Raquiza of the Philippine Rural Reconstruction Movement argues that the social reform scheme actually contradicts the country's development strategy, anchored on liberalization and entry of foreign capital.

"Unless government reorients its overall development strategy toward having social justice and gender equality at its center -- and asserts its economic role vis-a-vis the market -- the Social Reform Agenda will at best be only one big safety net for the many bound to fall by the wayside of progress," she said.

Poverty incidence has fallen from 39.9 percent to 35.7 percent in 1994, but wealth gaps remain wide. The richest 20 percent in the Philippines have 52.5 percent of total national income, while the poorest 40 percent have 13.6 percent.

Raquiza cites examples to show that economic growth can exist side by side with marginalisation. The Cavite, Laguna and Batangas provinces are a fast-growth, industrial hub. But they also have the highest concentration of landless farmers, at 78 percent.

And while economic growth has drawn in more women into the labor market, the quest for lower costs is pushing factories to hire women because they are cheaper labor, Raquiza explained.

The report for India, the only South Asian country with a national report in 'Social Watch', identifies serious economic constraints to spending more for development needs.

Efforts to increase development and social spending in India, home to 15 percent of the world's population and nearly a fourth of its poor, are hindered by mispriorities in the budget.

For one, 75 percent of the 1996-97 budget was spent in areas "unrelated to development", said the report written by the Center for Youth and Social Development Voluntary Action.

Defense spending is 20 to 22 percent of the budget, it said. Development spending climbed by 19 percent in 1992 to 1993, but slowed down to 0.6 per cent in 1995-96. A study of the budgets in the last two years show that "it is obvious that the social sectors were not a priority", the report found.

It warned that skewed budgetary priorities may be exacerbated by declining overseas development assistance to South Asia, which has fallen from US$5.2 billion in 1987 to $4.9 billion in 1993.

-- IPS