North-South Gap Emerging in the East

By Johanna Son, Inter Press Service Harare
11 April 1995

Manila, Apr 11 (IPS) - The chasm between Asia's fast-growing nations and its laggard economies is creating a regional landscape that is starting to mirror North-South disparities.

Asia evokes impressive images of economies growing at breakneck speed. It is home to Japan, whose per capita income ranks third in the worlds, and tiger economies whose living standards rival those of European nations.

But the world's fastest-growing region is also home to some of the world's poorest nations, whose per capita incomes fall below 200 dollars and have no place in slick investor briefs on Asia.

Bangladesh, Cambodia, Nepal and Bhutan are near the bottom of the United Nations' Human Development Index. Half of the world's 1.3 billion poor live in South Asia, and India alone has 27 percent of the global figure.

Seven of 10 developing countries with the most number of poor are in Asia, h, Indonesia, Vietnam, the Philippines, Pakistan and China. Nine percent of China's population lives in poverty, compared to India's 40 percent.

There may well be two Asias, rich and poor. The North-South gap has come to the east, creating an 'east-south' gap.

In 1993 the World Bank said East Asia, whose poor fell from 35 percent of the populace in 1970 to 10 percent in 1990, may well be ''the first developing region to overcome the poverty problem''.

But large gaps remain within Asia. south Asia's 5.1 percent growth in 1994 was the best in four years, but it still lags behind south-east Asia's 7.5 percent. In its 'Annual Development Outlook 1995 and 1996', the Asian Development Bank (ASDB) says south Asia will continue to trail east and south-east Asia.

''The growth experience of east and south-east Asia has diverged substantially during the past two and a half decades,'' says assistant chief economist J. Malcolm Dowling, due to differences on economic reform and investments and savings rates.

Mainly agrarian transitional economies like Cambodia, Laos, Burma and Vietnam, the central Asian republics and the Pacific island economies have yet to share in richer Asia's boom.

A clear sign of poverty and inequality within Asia is cross- border migration that is rising as affluent nations try to control it. There are now millions of intra-Asian migrants as Asia replaced the Middle East as migrants' main destination in recent years.

Nationals from Bangladesh, Sri Lanka, the Philippines, Thailand and Burma take their chances in richer nations like Japan, Taiwan and Korea or labour-short Malaysia, Singapore and Brunei.

As in the global North-South gap, critics are pointing out not just intra-Asian disparities but what they say is richer nations' exploitation of poorer ones just opening up to the world.

Asia's wealth has so fired its profit-making instincts that its richer nations go into new frontiers scouting for business deals that are of dubious development value, activists argue.

They are protesting four Indochinese countries' signing of a Mekong River Accord in April, which would include dam-building along the river. They say this would serve commercial interests of investors and multilateral banks like the ASDB that are taking advantage of weaker and foreign exchange-hungry Indochinese states.

The spotlight is also focusing on Japan, biggest contributor to the ASDB and funder of three hydroelectric projects in Laos.

Kazuo Sumi of Japan's Niigata University, author of books on Tokyo's Aid, says the motive is plain and simple business. He said: ''Japanese firms first went to Korea in search of lower costs and then to Thailand, Indonesia, Malaysia and the Philippines. Now they are looking at China, Vietnam, Cambodia, Indochina.''

On the eve of its may annual meeting in New Zealand, even the ASDB is under scrutiny by groups that ask whether the bank-led entry into Indochina is predatory development that helps foreign businessmen more than local economies and peoples.

Sumi cited the example of the Nam Leuk dam project in Laos, to be funded by Japan and the ASDB. In October the bank, also involved in the Arun III dam project in Nepal, approved Laos' Theun-Hinboun hydropower project which will export energy to Thailand.

''This 'development' is for whom? The main objective is electricity for the Thais and not for Laos. If it is for (Laos') self-sufficiency, it is not needed,'' he said.

But the ASDB says growth aided by external funds into nations with low savings and investments does ease poverty. It cites drastic poverty decline in east Asia, whose high savings, strong exports and ability to attract capital ensure its growth ''will still be faster than elsewhere in the world,'' said the bank.

To put more stress on social sectors, the bank aims to achieve a 50-50 mix between traditional growth projects hand and programmes for poverty reduction, human resources, women and the environment.

Dowling says countries that get concessional loans from the Asian development fund are showing results, the improved performers being Nepal which in 1994 reached its best economic performance in a decade, Indonesia and the Philippines.

Awareness may be rising that aid, through Asian, still needs to be evaluated against local needs. In Cambodia, fledgling NGOs caution that the poor country must learn to say no to undesirable aid as it is at risk of overdependence on foreign assistance.

''In some ways there's too much money for Cambodia. Let's not talk about money first before deciding on our vision,'' activist Sochua Mu Leiper said. Added the cooperation committee on Cambodia: ''There is evidence to suggest that Cambodia and its people are more vulnerable today than at any time since the 1970s.''

Japan has also sent Cambodia harmful pesticides as agriculture aid. But as one agriculture expert told IPS, while ''others can tell Japan what they want, a country like Cambodia can't''.

Other upcoming Asian powerhouses are also investing abroad, but not all are welcome. Malaysian firms have come under fire for logging in Pacific islands. Countries like Korea are becoming donors too, after graduating from aid and lending schemes.

Perhaps Asia's future donors could learn a few lessons from their predecessors. Meantime poorer Asia is learning that while more investors and donors are coming from their own backyard, 'Asian' does not necessarily mean better, or more altruistic, donors and investors.
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