Graduation Address
by Mr. Tadao Chino, President,
Asian Development Bank
at the AIT 89th Graduation Ceremony
18 August 2000
It is a great honor to have received an honorary doctorate degree from this prominent institution and to address the members of the 89th graduating class. Congratulations to each one of the graduates for successfully achieving academic excellence and good luck to you as you embark on new endeavors with your hard-gained intellectual assets.
The economies in this region have been recovering at a much faster pace than initially anticipated. However, the recent Asian financial and economic crisis has underlined the importance, among others, of human capital development, higher education and advanced technology. These can contribute, not only to better management of economic, financial and social systems, but also to improved productivity and competitiveness. You should all be proud of the fact that, having studied at AlT- a world-class academic institution with a specific emphasis on the economic and social development of Asia, you are now at the forefront of the group of young elites who have to meet the region's acute needs for advanced skills and knowledge. As a development practitioner myself, I sincerely hope that you will always remember what great capability and potential you have to change the lives of so many Asians for the better. As is often said, 'knowledge is great power'.
At the beginning of this new millennium, Asia and the Pacific region faces many critical challenges. You yourselves must have experienced the impacts of the Asian financial and economic crisis that plagued the region. While recovery has turned out to be more robust than expected, this must not blur the lessons of the past three years. Asia must not revert to business as usual, taking the crisis as simply a short-term aberration. While ADB forecast for the next two years that the region's growth momentum will be maintained, its sustainability is greatly dependent on a commitment to persevere with structural reforms.
More importantly, despite significant progress in the past three decades and the remarkable recovery after the Asian financial crisis, Asia continues to be afflicted by unacceptable levels of deprivation, illiteracy, child malnutrition, gender disparity and environmental degradation. Even today, nearly 30 percent of Asians have no access to safe drinking water. Nearly 70 percent of Asians have no access to sanitation. Almost 50 percent of the adults in South Asia are illiterate. Close to 900 million people in the region still live in poverty. The primary objective for Asia and the Pacific should therefore be to reduce poverty, and to improve the quality of life of all people in this region. This is why we at ADB have made poverty reduction as our over-arching goal.
We recognize that reducing poverty is a multi-dimensional task. Let me mention several major challenges facing Asia.
The first challenge is that of attaining pro-poor, sustainable economic growth. Economic growth can reduce poverty by generating employment and incomes. Growth can also expand public revenues that can be used for better basic infrastructure and social services, which the poor desperately need. Growth can lift many more people out of poverty if it is pro-poor and sustainable. Growth must be inclusive because it is important not only to reduce poverty levels, but also to maintain social stability and cohesion.
The Asian experience has demonstrated that if we are to achieve the sustainable and inclusive economic growth needed to reduce poverty, a dynamic private sector is critical. Recognizing this, ADB has adopted a new strategy to refocus and energize our work for private sector development. The strategy requires us to promote private sector development by helping to put in place enabling policy and institutional environments. We also aim to catalyze private sector investments and use our public sector operations to increase opportunities for private sector investments. Regional cooperation can also make a subregion more attractive to private investors by providing wider business opportunities.
The second challenge is social development. Growth is necessary but not sufficient for poverty reduction. If poor people have no access to basic education, how can they take advantage of job and income opportunities created by economic growth? If there are gender discrimination and other forms of social exclusion, how can discriminated and excluded people take advantage of expanded economic activities and share the benefits of economic growth? Social development, therefore, should accompany economic growth in order to reduce poverty effectively.
The benefits of investments in social development extend far beyond humanitarian considerations. They empower people to take control of their own destinies. They provide social safety nets to those who are vulnerable and promote social inclusion. And they allow people to take advantage of the opportunities arising from globalization.
Social development is also essential if we are to prevent peopleespecially the most vulnerable including women, children and the elderly-from falling back into poverty. This is as important as pulling them out of poverty. The Asian crisis has shown how quickly poverty can recapture those who had only recently escaped it.
The third challenge is governance. Good governance, based on accountability, participation, predictability and transparency, benefits all segments of the society, but particularly the poor for they are the least capable of coping with the consequences of poor governance. Sound, well-managed, well-governed economies foster growth and equity. The rule of law is essential to encourage private investments as well as to reduce corruption. It is also important to promote a participatory approach in the policy formulation, implementation and monitoring to improve the effectiveness of government policies. This is especially important for the vulnerable groups that tend to have little political influence. Concurrent efforts should be made to strengthen civil society organizations, including academia and NGOs, so that they can play a more active and effective role in development processes.
The fourth challenge is globalization. As you know, much of Asia's success can be attributed to market-friendly and export-oriented economic policies that allowed the economies to take advantage of the increasingly globalized market. Globalization presents developing economies with enormous opportunities, but it also poses risks that have to be managed. Globalization helps developing economies by providing access to foreign markets, facilitates inflows of capital and the transfer of technological and managerial know-how. At the same time, however, globalization can generate social and economic stresses as well as financial volatility. These may exact a heavy toll on developing economies, particularly when there exist vulnerabilities in policies and institutional capacities. We need to find ways to maximize the benefits of globalization, while minimizing its risks and downside effects.
The appropriate response for developing economies, therefore, is to equip themselves with the institutional and organizational capacity to participate effectively in global markets. What is needed in the long term includes upgrading of productivity through comprehensive efforts by governments and by the private sector. It is also necessary to develop adequate regulations and supervision and to make careful and well-sequenced policy decisions. Equally important are the efforts to strengthen the international financial architecture, and to develop adequate social protection systems.
The fifth challenge is to ensure that new technologies do not widen the gap between the haves and the have-nots, both globally and within each country. Instead, we must use technology in our fight against poverty. Medical science, for example, can produce lifestyle drugs, but it can also develop drugs that have wide benefits to all in containing communicable diseases, such as malaria, tuberculosis and HIV/AIDS. The enormous potential of information and communication technology is well known. IT can foster economic growth, enhance transparency, and reduce transaction costs, especially for the poor and the marginalized with limited access to physical infrastructure and political power. We must harness IT for the social and economic progress in the developing countries. It is therefore encouraging to note that the leaders of the G8 countries have recently announced in Okinawa their renewed commitment to promote IT with an emphasis on minimizing the risks of the digital divide. ADB fully supports the Okinawa Charter on Global Information Society, and we will strengthen our assistance in this area.
The sixth challenge is how to ensure productivity increases in the real sectors, for these are the basis of growth and poverty reduction in many Asian countries. For example, the majority of the region's poor still live in rural areas, and depend on agriculture for food security and income. However, investment in rural areas is generally inadequate, whether for agriculture, energy, telecommunications, transport, education or health. Many rural poor have no access to electricity and only limited access to primary and secondary education. Before people can make use of IT, they must have access to electricity and should be able to read and write. The knowledge and investments in research and development (R&D;) are growing ever more important in the era of new economy. Governments need to develop enabling environments that promote greater investments in R&D; and facilitate the adoption of new technologies if Asian economies are to keep up with the ever intensifying competition in global markets. The challenge of improving productivity requires a wide range of efforts by both public and private sectors.
Last but not least, there is the challenge of environmental degradation. Poverty is both a contributor to, and a major consequence of, environmental degradation. We have to understand the nexus between poverty reduction and environmental protection. Asia suffers from serious environmental degradation. The air and water in many parts of Asia are among the most polluted in the world. Population increase and rapid urbanization continue to impose a heavy toll on the environment. ADB is preparing its new environment policy that will focus on the environmental constraints inhibiting poverty reduction. A new water policy, which places emphasis on the sustainable and inclusive approach to the management of this vital natural resource, is also about to be finalized. In addition, ADB will support regional and sub-regional initiatives for environmental cooperation.
In my view, those challenges I have enumerated can all be summarized into one supreme challenge: the challenge of poverty reduction. Poverty in a world as knowledgeable and as resourceful as ours is totally unacceptable. Poverty, however, is not immutable; public policy and action can and must eliminate poverty. I believe this is what development is all about.
I hope that I have not scared you with the enormous challenges that are ahead of us in the 21st century. With your training and skills, with your commitment, with your knowledge, you can help meet these challenges. The work is very demanding, but I can assure you that it is most fulfilling. The world is changing rapidly. Who knows what might be the skills required a decade from now? Who could imagine that IT would make breakthrough so rapidly? We should be prepared to work hard as well as sharpen our skills to remain relevant. This is also true for institutions. To remain relevant, institutions should develop forward-looking strategies and frameworks. This is true for AIT and ADB as well. Hence, we at ADB are preparing a Long-term Strategic Framework to define our role from 2001 to 2015.
I would also like to encourage you to maintain the invaluable friendships and respect you have built with your classmates, professors and instructors over the years. Through collaboration and discussions, you have come to know many great people with shared objectives and interests. One day they may become your colleagues, counterparts or collaborators. This wealth of friends across the region will continue to reward you with diverse perspectives and wisdom.
Indeed, there are enormous possibilities for Asian countries and their people to cooperate in development. Asia has great diversity in natural endowments, economic structures and institutional heritage. Intra-regional trade and investment flows within Asia have become significant and dynamic components of economic growth, and their importance is bound to increase. Closer regional and sub-regional cooperation not only enables economies to enjoy greater complementarity and economies of scale, but also contributes substantively to maintaining peace and stability, an important condition for further economic development and prosperity.
Recognizing the importance and potential of regional and sub-regional cooperation, ADB's Charter explicitly lists it as one of its purposes, and ADB has played an active role as an 'honest broker' in strengthening cooperation among Asian countries, especially in the Greater Mekong Sub-region and South Asia. But I firmly believe that strong personal ties, such as those you have nurtured at AIT, are the very first step towards further cooperation in the region.
Every human being on this planet should be able to live with dignity and hope. We must dedicate ourselves to achieving our vision: a region free of poverty. This is no utopian dream. The Asia and Pacific region can be free of poverty. This will lead to a world free of poverty. I sincerely hope that we can all bring together our expertise and knowledge, and work closely together in this noble endeavor.