Asia must lift productivity for higher growth and wellbeing, human development is critical: ADB

Apr 20, 2015 (LBO) – Asia and the Pacific need to increase the overall productivity through investments in physical, human and natural capital, said a new annual review by Independent Evaluation at the Asian Development Bank (ADB).

“A part of boosting productivity is making the most of human resources which therefore is also good for greater inclusion,” Vinod Thomas, Director General of Independent Evaluation said.
“Another part is relying on more high yielding public investments which is good for environmental sustainability and climate friendliness as well.”

However the report says the growth in overall productivity in Asia and elsewhere has slowed particularly since the global financial crisis in 2008.

The ADB says as a result there is a need for countries to be more strategic in getting the most from their investments.
“An improvement in productivity of physical investments by just two-tenths of one percent in Asia is like adding 10 billion dollars to those investments,” Thomas said.

The report says, that expansion in one area of overall productivity—output per worker—has slowed in recent years in Asia, including in the three largest economies, the People’s Republic of China (PRC), India, and Indonesia and this could have a negative spillover effect elsewhere in the region.

The report says, China needs to become a bigger driver of growth for Asia as the country re-balances its economy in favor of consumption over investment, productivity.

“Stronger results have to be wrung from investments in physical, human, and natural resources through efficiency and sustainability gains,” said the study’s principal author Walter Kolkma.

“Human development is critical for raising productivity and this means aggressive commitments to education, training and healthcare.”

The report says, it is a challenge to link infrastructure investment to inclusive growth objectives and climate change.

“The latter has become an urgent priority given the acute vulnerability to the rise in extreme weather events in Asia and the Pacific,” the statement by ADB said.

“This change is illustrated most recently by the devastation caused by Cyclone Pam in Vanuatu, and earlier by super typhoon Haiyan that hit the Philippines in 2013, the 2011 floods in Australia and Thailand and recurring ones in China and India.”

The report said ADB is in a right position to help countries put in place infrastructure incorporating both climate change resilience and inclusion of lower income strata in the growth process which will allow ADB to increase its annual financing commitments to countries up to 20 billion dollars, and if leveraged one to one with co-financing, up to 40 billion dollars.