Rich growing faster than poor: ADB

Kathmandu, August 8:

Inequality is rising in most parts of Asia, darkening growth prospects and increasing the risk of potentially violent social strains, the Asian Development Bank (ADB) said on Wednesday.

The bank, in its flagship annual statistical publication - Key Indicators 2007, blamed the widening gap partly on globalisation, which it said favours the well educated at the expense of the less skilled, and recommended a range of policies to redistribute wealth and create more equal opportunities.

The Manila-based bank said incomes were most unequal in most developing and least developed countries. Relative inequality as measured by the Gini coefficient has risen significantly in Bangladesh, Cambodia, China, Lao PDR, Nepal and Sri Lanka between the 1990s and 2000s.

China’s Gini coefficient, a standard measure of income inequality, soared to 47.3 in 2004 from 40.7 in 2003 and is now at a level more typical of Latin America. In a society where income was perfectly distributed, the Gini coefficient would be zero, if all the income was concentrated in the hands of one person, it would be 100.

The gulf between rich and poor shows up in other ways. India has a lower Gini coefficient of 36.2, but among its poorest families as many as 28 per cent of children are severely

underweight compared with 5 per cent for the richest households. India is a good illustration of the impact of globalisation on income distribution, the report adds.

While wages for English-speaking graduates are rising fast as India’s information technology sector thrives, pay for unskilled labour is stagnating. “Widening differentials in earnings of the college-educated vis-à-vis less-educated individuals appear to be the single most important observable factor accounting for increasing inequality,” the ADB said.