Rising inequality and the WEF

The Philippines is hosting the World Economic Forum in East Asia. Its trailblazing economic accomplishments in the past few years are enough leverage for the prestigious meeting to be held here. With the theme “Leveraging Growth for Equitable Progress,” the WEF is envisioned to “serve as an ideal platform to promote greater inclusion across East Asia and to instill more resilient decision-making in the face of unpredictable economic and natural disruptions.”

The meeting highlights the growing importance of Asia throughout the world. The average annual growth rate of the gross domestic product of Asia’s developed and developing countries from 1990 to 2010 was pegged at 7 percent, while the rest of the world’s growth remained stagnant or only moderately increased, according to the Asian Development Bank (ADB).

But stunning growth and wealth creation are occurring side by side with tremendous poverty and worsening inequality. The rich get richer and the majority who are poor are left behind with little or no access to the opportunities created by this growth, let alone to the basic services they so direly need. The ADB estimates that at least 1.7 billion people in the region still struggle to make both ends meet with $2 a day, with 700 million of them mired in abject poverty as they struggle to live with less than $1 a day. The Food and Agriculture Organization estimates that at least 572 million people in Asia are chronically hungry and a huge percentage undernourished.

This is a bitter irony because the region is home to two-thirds of the world’s food producers—family farmers, rural women, and small fishers.

While most of the world’s newest millionaires hail from Asia’s two emerging economic superpowers, China and India, these two countries are also home to the world’s poorest. In both countries, the majority of the population live in crushing poverty.  The World Bank estimates that at least 32.7 percent of India’s population of 1.27 billion live below the international extreme poverty line of $1.25 a day. Meanwhile, China holds the record of having the highest Gini coefficient of inequality in developing Asia. Women have also been excluded from the benefits of this growth. Women make up more than half of the population in Asia, but they are not given equal access to resources. Only 12 percent of the 3 million landowners in Asia are women.

The region’s economic growth is growth that is not shared by all; it is progress that is not equitable. An Oxfam report titled “Working for the Few: Political capture and economic inequality,” which was released last January in time for the WEF in Davos, revealed that the “85 richest people own the wealth of half of the world’s population.”

In the Philippines alone, even if the government is trumpeting its 7.2-percent growth rate and the credit rating upgrades from Standard and Poor’s, Moody’s, and Fitch, 11.8 million households consider themselves poor, with 8.8 million households food-poor, according to the Social Weather Stations survey for the last quarter of 2013. Joblessness is pervasive with a rate of 27.5 percent, and the Gini coefficient of inequality has remained stagnant despite social and economic measures aimed at reducing it.

Clearly, growth alone does not produce the desired broad social benefits that would reduce poverty and hunger. Extreme concentrations of wealth in the hands of the few have promoted inequality, further perpetuating poverty since wealth also redounds to power, influence and connections. In our country, for example, inequality is threatening democratic institutions and access to public funds. The P10-billion pork barrel scam roiling society is a concrete example of how inequality undermines equal access to wealth, with the privileged few—the scam perpetrators—using power and influence to tilt the balance in their favor. This is a clear illustration of how a massive concentration of resources is a significant setback to inclusive political structures and economic growth.

But extreme inequality in Asia is not inevitable. It can be reversed quickly by addressing its root causes—imbalances in political and economic power, lack of access to productive resources, poor people’s vulnerability and lack of adaptive capacity to climate change shocks, lack of women’s access to resources, etc.—which will provide basic infrastructure and services aimed at leveling the playing field for the poor.

With its members’ planned economic integration in 2015, the Association of Southeast Asian Nations, or Asean, can respond to this challenge by implementing policy measures that will help reduce inequality while still fostering economic growth. It can encourage its members to provide basic infrastructure and services that can help spread growth opportunities and provide access to the poor. It can adopt a regional regulatory framework that will protect communities of small farmers and food producers from unfair land investments and land-grabbing. It can promote women’s equal access to resources.

As the region’s growth is also hostage to extreme weather, Asean can take an active role in the UN Framework Convention on Climate Change to argue support for climate-change adaptation and disaster risk reduction initiatives.

Together, we can work toward reversing the rising trend of inequality which seeks to dismantle even the limited and hard-fought gains achieved against poverty and injustice.

Carmina Flores-Obanil is Oxfam’s East Asia GROW campaign officer. Jed Alegado is Oxfam’s media and communications officer in the Philippines.