Saturday, June 7, 2014

The ADB: Its Evolving Role

The Asian Development Bank (ADB) has been and continues to be an important partner of Asian countries in achieving poverty reduction. During the last five years, ADB has provided roughly $95 billion in development assistance to the region. The role of ADB in the development of Asia and the Pacific is briefly discussed in this essay.
The Asian Development Bank (ADB) was established on December 19, 1966 in Manila, Philippines. It was conceived to foster economic growth and cooperation in Asia which was then one of the poorest regions in the world. During its first years, the focus of ADB’s operations was on provision of assistance in food production and rural development. It was in the 1970s that the assistance extended into the education and health sectors. In the latter part of the decade, the gradual rise of Asian economies has increased demand for investments in infrastructure and industry development and therefore the ADB responded to this need. In addition, the oil price shock during the 1970s has led the bank to also support in development of domestic energy sources.

ADB’s focus on infrastructure and energy projects continued in the 1980s while its support to social infrastructure including microfinance, gender, education, health, urban planning, and environment also continued. In the 1990s, the ADB began promoting regional cooperation such as that for the Greater Mekong Sub-region. When the financial crisis struck in 1997, ADB responded through programs that strengthen the financial sectors and develop social safety nets for the poor. It was towards the end of the 1990s when the ADB adopted poverty reduction as its overarching goal.

During the early part of the 21st century, ADB recognized the importance of regional cooperation especially when the region was hit by severe acute respiratory syndrome (SARS) epidemic. Aside from this, the region is prone to many natural calamities such as typhoons, the El-NiƱo phenomenon, and tsunamis. ADB committed into assisting member countries respond to different calamities.

At present and up to 2020, the organization’s strategy is embodies in its long-term strategic framework called Strategy 2020. To achieve its objectives, the ADB boosted its capital base by 200 percent in 2009 from $55 billion to $165 billion. This strategy shows three key agendas – inclusive economic growth, environmentally sustainable growth, and regional integration. All these lead to its overarching goal of poverty reduction.  These agendas are highlighted because despite the rapid economic growth of the region, there remain a lot of countries lagging behind. At the same time, the rapid economic progress puts a heavy strain on the environment warranting the urgent need to address environmental concerns in a more concrete way. Moreover, regional integration is an important approach to improve connectivity thereby enhancing trade that improve livelihood and fostering better communication among neighbouring countries in addressing environmental issues that transcend boundaries.

Indeed, an independent evaluation of the Strategy 2020 of ADB noted that regional cooperation and integration is ADB’s strength and niche area. One lauded example is its multifaceted role in the Greater Mekong Sub-region Economic Cooperation Program in terms of financing, provision of technical and advisory support, and coordinating dialogues. ADB has greatly contributed in the Infrastructure development so that the GMS countries become integrated economically.  Its efforts combined with that of other stakeholders including the GMS countries have paved to the tripling of real per capita income in the region during the period 1991 to 2012, the growth of intra-regional exports twenty-four times, doubling of tourism arrivals, and growth of foreign direct investment ten times. Aside from GMS Sub-region cooperation, ADB has also fostered partnership in the Central Asia Regional Economic Cooperation (CAREC) Program.
Apart from increasing connectivity through infrastructure, regional integration efforts also come in the form of trade facilitation and increasing the capacity of countries in their participation in free trade agreements. ADB’s engagement in Aid for Trade started in 2006. Since then the organization has been into capacity building activities and has been supporting free trade agreements. For instance, it provides a Free Trade Manual for Asia and training courses on designing, negotiating, and implementing FTAs. It launched in 2006 the Asia Regional Integration Center (ARIC) to provide resources about FTA trends and documents. The organization has also provided related technical assistance programs such as that for ASEC, and is conducting relevant research activities in conjunction with the theme of economic cooperation and integration.

ADB’s key area of operation is infrastructural development. It aims to foster economic growth through investment in transport and information and communication technology, and energy. In 2012, 46 percent of the total ADB assistance of $21.57 billion went to these sectors. Such strategy nonetheless will continue to define ADB’s way of helping nations achieve poverty reduction. It estimates that emerging Asia will need $8 trillion for infrastructure financing through 2020. This is the amount necessary to support the current pace of economic growth.

However, the primary focus on infrastructure has received criticisms from non-governmental organizations because of concerns that it fails to achieve objectives as basic as food security. Also, some of ADB’s infrastructural projects have been criticized for their severe negative environmental effects and adverse effects on the livelihood of the poor (e.g. Samut Prakarn Wastewater Management Project in Thailand; Chasma Right Bank Irrigation Project in Pakistan). Whether such approach is the most effective and efficient is debatable.

Roughly 48 years since its establishment, ADB continues to fight poverty as Asia remains the residence to two-thirds of the world’s poor. While it is difficult to speculate the impact of ADB on the development of Asia in general, it is undoubtedly an important source of not only development finance but also knowledge. Through the years, it has clearly illustrated its responsiveness in addressing financing and information needs so that governments can carry out their development plans and tackle important issues as they arise.
(Photo credits here.)


Asian Development Bank Annual Report 2012. ADB Publications. Available online at  Retrieved April 5, 2014

Unpacking the ADB: A Guide to the Asian Development Bank. Available online at Retrieved April 5, 2014

Asian Development Bank. Midterm Review of Strategy 2020: Meeting the Challenges of a Transforming Asia and Pacific. Available online at Retrieved April 5, 2014

Kang, Jong Woo. Trade-Related Capacity Building in East Asia: Role of ADB. Presentation in Cambodia, February 5, 2008.

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