What Apec means to Asia’s poor
This week, Manila hosts the Asia-Pacific Economic Cooperation (Apec) leaders’ meeting, which will attract many prominent world leaders. This is a good time for Apec leaders to reexamine the prevailing development and economic paradigm that has increased the wealth of a handful while millions remain in poverty, creating a landscape of staggering inequality.
Steady economic growth in most of the countries across Asia in the last quarter of this century has created jobs, new wealth and reduced poverty. But a study from the Asian Development Bank found that inequality in the region between the mid-1990s and the late 2000s has risen by as much as 18% and that 1.6 billion people continue to live on less than $2 (72 baht) a day. The Gini coefficient — a common inequality measure — worsened in Asia during the 1990s and 2000s in countries where more than 80% of the population live.
That inequality increased in the midst of the region’s much vaunted economic growth means that something is amiss. In a report released earlier this year, Oxfam found that 240 million people in Asia could have escaped poverty, had inequality not increased from 1990 levels.
Apec is an economic forum where member countries work together to facilitate trade and investments with an eye on boosting prosperity in the Asia-Pacific region.
This year, the Apec summit’s theme is “building inclusive economies, building a better world”. The forum focuses on four areas: 1) investing in human capital development; 2) fostering small and medium enterprises’ (SMEs) participation in regional and global markets; 3) building sustainable and resilient communities; and 4) enhancing the regional economic integration agenda.
In Oxfam’s new policy paper, “A Different Route, Reimagining Prosperity in Asia”, we propose that Asian economies adopt the paradigm of inclusive and sustainable development (ISD), which is a framework that can be used to pursue policies related to the four focus themes of this year’s Apec summit.
In simple words, “inclusive and sustainable development is one where everyone is able to meet essential needs and enjoy basic rights and freedoms, while respecting the limits of earth’s resources”. As such, ISD is an antidote to the rising inequality in Asia, ensuring that everyone has a chance at prosperity. ISD, not economic growth, is the true measure of development.
Investing in human capital development is crucial for Apec because evidence from around the world indicates that government spending on education and health has significant impacts on reducing inequalities. Governments in Asia spend less on education and health hence not creating equal opportunities for poor and marginalised groups to benefit from economic growth.
Human capital development can be resourced from progressive taxation on rich individuals and corporations. The current “race to bottom” principle adopted by Asian governments to reduce corporate tax rates and provide incentives to attract capital needs radical rethinking.
Apec members must also champion the rights of workers to organise and must insist for corporations to abide by human rights principles in conducting their business operations. In “A Different Route”, Oxfam recommends that countries craft action plans based on the UN Guiding Principles on Business and Human Rights, working closely with citizens and groups in providing redress to communities affected by private sector investments.
Apec’s aspiration for SMEs to participate in the market must include empowering SMEs to be part of decision-making; increasing their access to finance, fair and inclusive lending terms and effective credit guarantee schemes; helping SMEs to access technology for value addition; and facilitating their links to markets.
In building sustainable communities, Apec must consider that natural resources are finite. Blind pursuit of economic growth undermines “the long-term sustainability of the environment, the very resource base, that support people’s basic needs and upon which future growth and development depend”.
As a fundamental principle of inclusive sustainable development in Asia, Apec’s economic model must value the environment, and not only productivity or profit. This is made more urgent by climate change, which is projected to incur billions of economic losses and upend millions of lives.
A collective response to address climate change must “develop and enforce stricter environmental standards on waste treatment, carbon emissions, deforestation and land use conversions”. Companies must be asked to pay the environmental costs of their operations and countries can address climate change by adopting policies that promote renewable energy, reduce and, with the support of the international community, eventually phase out greenhouse gas emissions.
In enhancing its regional economic agenda, Apec must include measures that include those who are left behind.
As they meet in Manila this week, Apec leaders must remember the poor men and women workers and farmers whose fate is in their hands. Asia’s poor and vulnerable are waiting for the time when economic growth means they, too, can enjoy prosperity. We hope that Apec leaders have placed mechanisms for allowing the voices of poor people to be part of the conversation about real and lasting change.
Apec’s economic model must value the environment, and not only productivity or profit.