82% of Asia shows rising wealth divide

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Asia wealthAsia is losing its grip in the battle against income inequality, with 11 of 28 Asian countries – representing 82 per cent of the region’s 2010 population – showing a widening wealth gap, Asian Development Outlook 2012, a report produced by the Asian Development Bank (ADB), has noted.

The study measured rising income inequality through the 1990s and 2000s to determine that the Gini coefficient for developing Asia, based on per capita consumption, rose from 39 to 46.

This grim disconnect underscores the reality that while Asia’s aggregate economic growth has created new pockets of wealth, it has been ineffective at reducing poverty.

“Rising inequality in developing Asia is closely associated with rapid increases in the very top income groups – that is, the rich are getting richer much faster,” the report revealed.

Imbalanced wealth in Asia is most felt in developing nations – including the majority of those in the ASEAN bloc – where the low-income strata of society often are left with inadequate if any public services, such as education, healthcare and transport connectivity.

One poignant result of the wealth gap is that while better off citizens attend primary and secondary school, rural children are left at a disadvantage, thus entering into a vicious cycle where poorer families are left to cope with little tools to elevate their status.

A stark example: In the Philippines, children of wealthier parents are seven times more likely to attend college than their poorer peers.

An underlining theme of the growing wealth divide is urbanization, where public funds are disproportionately channeled.  According to the ADB’s Framework of Inclusive Growth Indicators 2012 report, the ratio of rural poverty to urban poverty worsened in 18 of the region’s economies between 1990 and 2000.

Asia’s rapidly widening rural-urban wealth gap is the most conspicuous in China, India and Indonesia, with China’s Gini coefficient rising from 32 to 43, India’s from 33 to 37 and Indonesia’s from 29 to 39.

“This kind of rising inequality in the PRC, India, and Indonesia shows that the economic growth process has not been sufficiently inclusive,” says Juzhong Zhuang, ADB’s deputy chief economist. “Growth is necessary, but growth alone is not enough.”

The Philippines has the highest income inequality in ASEAN at 44, followed by Singapore at 42.5, Thailand at 42, Cambodia at 41.7 and Indonesia.

Finding the culprit

The driver of Asia’s widening wealth divide appears to derive from the same froes that have brought about the continent’s economic rise, the ADB report suggests.

Asia’s lack of any novel economic ideology has placed it in the current expansionary capitalist world order, bet defined through the lens of globalisation.

With increased international trade that has introduced new technologies and enabled greater capital flows, tremendous wealth creation opportunities have been realised.

This are, however, not being equally shared.

“Profits from increased market access skew to factory owners than factory workers; skilled workers get paid more than the unskilled who may even lose their jobs to new technology; cities with decent infrastructure prosper while remote ones lag,” the report states.

Export-driven economies have been provided employment for millions of workers, but this growth model has also left millions more excluded from the bottom line of the emerging world success story.

It could be that rising inequality is an unfairly named bugbear intrinsically part of the globalizing world, a trend that couldn’t be reversed even if it was desired.

“Globalisation has been a terrific benefit to India,” says Monash University’s Vicziany. “The problem is that rural India has not benefited from it. Liberalisation has been an urban phenomenon.”

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Reading Time: 2 minutes

Asia is losing its grip in the battle against income inequality, with 11 of 28 Asian countries – representing 82 per cent of the region’s 2010 population – showing a widening wealth gap, Asian Development Outlook 2012, a report produced by the Asian Development Bank (ADB), has noted.

Reading Time: 2 minutes

Asia wealthAsia is losing its grip in the battle against income inequality, with 11 of 28 Asian countries – representing 82 per cent of the region’s 2010 population – showing a widening wealth gap, Asian Development Outlook 2012, a report produced by the Asian Development Bank (ADB), has noted.

The study measured rising income inequality through the 1990s and 2000s to determine that the Gini coefficient for developing Asia, based on per capita consumption, rose from 39 to 46.

This grim disconnect underscores the reality that while Asia’s aggregate economic growth has created new pockets of wealth, it has been ineffective at reducing poverty.

“Rising inequality in developing Asia is closely associated with rapid increases in the very top income groups – that is, the rich are getting richer much faster,” the report revealed.

Imbalanced wealth in Asia is most felt in developing nations – including the majority of those in the ASEAN bloc – where the low-income strata of society often are left with inadequate if any public services, such as education, healthcare and transport connectivity.

One poignant result of the wealth gap is that while better off citizens attend primary and secondary school, rural children are left at a disadvantage, thus entering into a vicious cycle where poorer families are left to cope with little tools to elevate their status.

A stark example: In the Philippines, children of wealthier parents are seven times more likely to attend college than their poorer peers.

An underlining theme of the growing wealth divide is urbanization, where public funds are disproportionately channeled.  According to the ADB’s Framework of Inclusive Growth Indicators 2012 report, the ratio of rural poverty to urban poverty worsened in 18 of the region’s economies between 1990 and 2000.

Asia’s rapidly widening rural-urban wealth gap is the most conspicuous in China, India and Indonesia, with China’s Gini coefficient rising from 32 to 43, India’s from 33 to 37 and Indonesia’s from 29 to 39.

“This kind of rising inequality in the PRC, India, and Indonesia shows that the economic growth process has not been sufficiently inclusive,” says Juzhong Zhuang, ADB’s deputy chief economist. “Growth is necessary, but growth alone is not enough.”

The Philippines has the highest income inequality in ASEAN at 44, followed by Singapore at 42.5, Thailand at 42, Cambodia at 41.7 and Indonesia.

Finding the culprit

The driver of Asia’s widening wealth divide appears to derive from the same froes that have brought about the continent’s economic rise, the ADB report suggests.

Asia’s lack of any novel economic ideology has placed it in the current expansionary capitalist world order, bet defined through the lens of globalisation.

With increased international trade that has introduced new technologies and enabled greater capital flows, tremendous wealth creation opportunities have been realised.

This are, however, not being equally shared.

“Profits from increased market access skew to factory owners than factory workers; skilled workers get paid more than the unskilled who may even lose their jobs to new technology; cities with decent infrastructure prosper while remote ones lag,” the report states.

Export-driven economies have been provided employment for millions of workers, but this growth model has also left millions more excluded from the bottom line of the emerging world success story.

It could be that rising inequality is an unfairly named bugbear intrinsically part of the globalizing world, a trend that couldn’t be reversed even if it was desired.

“Globalisation has been a terrific benefit to India,” says Monash University’s Vicziany. “The problem is that rural India has not benefited from it. Liberalisation has been an urban phenomenon.”

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