ADB: new direction?

The Asian Development Bank will seek endorsement of a new direction in Madrid on Saturday as it faces calls to redefine its role in the world's fastest growing region amid criticism of the work it does.

Pole of growth?

The continent's future economic growth depends upon how effectively the region's markets can be combined into a coherent whole. Much of the world looked to Asia to emerge as what the World Bank has called an independent "pole of growth" for the global economy, effectively 'decoupled' from the United States and its recession woes. However, the region's continued prosperity and growth is threatened by global slowdown, a lack of integration, infrastructure deficiencies and other constraints.

If the United Nations Millennium Development Goals (MDGs) -- which range from halving extreme poverty to halting the spread of HIV/AIDS -- are to be met by the target year of 2020, they must be achieved in Asia, which has the highest numbers of people living in poverty of any region of the world. Yet many of the non-income goals are currently in danger of being missed.

New roadmap

To address this, the ADB's executive board approved a new long-term strategic framework (LTSF) last month. The LTSF sets out the ADB's roadmap for 2008-20: it aims to foster inclusive, environmentally sustainable growth in Asia. It will also refocus lending to five core operational areas: infrastructure, the environment, regional cooperation and integration, finance sector development, and education.

Yet is the money reaching the right places? This Saturday, some governors will criticise what they see as the bank's over-emphasis on helping middle-income Asian countries at the risk of neglecting its mandate to reduce poverty. Inequality in the region as a whole has risen, but especially in Bangladesh, Cambodia, China, Laos, Nepal, and Sri Lanka. On the other hand, declining levels of inequality characterise many of the Central Asian republics and the three Southeast Asian countries worst affected by the economic and financial crisis of 1997–98.

Others have criticised the ADB on grounds of alleged inadequacies in its human resources and budgetary policies, claiming that the bank has not reformed its own structure to tackle the LTSF's expanded mandate.

Structural worries have long plagued the organisation: a recent in-house report acknowledged that many of the bank's loans over the past seven years have failed to meet desired objectives, but it blamed this in part upon conflicting demands by ADB shareholders and ADF donors.

Such tensions are not unusual in most multilateral development institutions, but they appear especially marked in the ADB because of the existence of a clearly identifiable development agenda among countries of the region.

Even so, the bank's Asian constituents broadly support the new strategic framework. The Madrid meeting should be key to resolving these differences, aiming to help the bank more effectively promote new development goals in Asia.