What APEC means to poor people in Asia

Cherian Mathews, Regional Director, Asia office of Oxfam
Recently Manila hosted the 23rd Asia-Pacific Economic Cooperation (APEC) Leaders’ Meeting—under the theme of Building Inclusive Economies, Building a Better World: A Vision for an Asia-Pacific Community- that was attended by prominent world leaders.

The 2015 Leaders’ Declaration affirmed ‘to take action to fully realize the vision laid down by our predecessors of a stable, integrated, and prosperous community in the Asia-Pacific, in which all our people can enjoy the benefits of economic growth and technological progress. Our enduring commitment will underwrite the peace, stability, development, and common prosperity of the Asia-Pacific.’

This is a good time for APEC leaders to re-examine the prevailing development and economic paradigm that has increased the wealth of a handful while millions remain in poverty, creating a landscape of staggering inequality. Steady economic growth in most of the countries across Asia in the last quarter of this century has created jobs, new wealth and reduced poverty. But a study from the Asian Development Bank found that inequality in the region between the mid-1990s and the late 2000s has risen by as much as 18% and that 1.6 billion people continue to live on less than $ 2 a day. Gini coefficient - a common inequality measure - has worsened during 1990s and 2000s in the countries where more than 80% of the population lived in Asia.

That inequality increased in the midst of the region’s much- vaunted economic growth means that something is amiss. In a research report released earlier this year, Oxfam found that 240 million people in Asia could have escaped poverty, had inequality not increased from 1990 levels. 

APEC is an economic forum where member countries work together to facilitate trade and investments with an eye on boosting prosperity in the Asia Pacific region. It focuses on four areas:  1) investing in human capital development; 2) fostering small and medium enterprises’ (SMEs) participation in regional and global markets; 3) building sustainable and resilient communities; and 4) enhancing the regional economic integration agenda.

In Oxfam’s new policy paper, A Different Route, Reimagining Prosperity in Asia, we propose that Asian economies adopt the paradigm of inclusive and sustainable development (ISD), which is a framework that can be used to pursue policies related to the four focus themes of this year’s APEC summit. In simple words, “inclusive and sustainable development is one where everyone is able to meet essential needs and enjoy basic rights and freedoms, while respecting the limits of earth’s resources.” As such, ISD is an antidote to the rising inequality in Asia, ensuring that everyone has a chance at prosperity. ISD, not economic growth, is the true measure of development.

Investing in human capital development is crucial for APEC because evidence from around the world indicates that government spending on education and health has significant impacts on reducing inequalities. Governments in Asia spend less on education and health, thus not creating equal opportunities for poor and marginalized groups to benefit from economic growth. Human capital development can be resourced from progressive taxation on rich individuals and corporation. The current ‘race to bottom’ principle adopted by Asian governments to reduce corporate tax rates and provide incentives to attract capital needs radical rethinking.

APEC members must also champion the rights of workers and must insist for corporations to abide by human rights principles in conducting their business operations. In A Different Route, Oxfam recommends that countries craft action plans based on the UN Guiding Principles on Business and Human Rights, working closely with citizens and groups in providing redress to communities affected by private sector investments.

APEC’s aspiration for small and medium enterprises (SMEs) to participate in the market must include empowering SMEs to be part of decision-making; increasing their access to finance, fair and inclusive lending terms and effective credit guarantee schemes; helping SMEs to access technology for value addition; and facilitate their links to markets. In building sustainable and resilient communities, APEC must consider that natural resources are finite. Blind pursuit of economic growth undermines ‘the long-term sustainability of the environment, the very resource base, that support people’s basic needs and upon which future growth and development depend.’

As a fundamental principle of inclusive sustainable development in Asia, APEC’s economic model must value the environment, and not only productivity or profit. This is made more urgent by climate change, which is projected to incur billions of economic losses and upend millions of lives. A collective response to address climate change must “develop and enforce stricter environmental standards on waste treatment, carbon emissions, deforestation and land use conversions”. Companies must be asked to pay the environmental costs of their operations and countries can address climate change by adopting policies that promote renewable energy, reduce and, with the support of the international community, eventually phase out greenhouse gas emissions.

In enhancing its regional economic agenda, APEC must include measures that include those who are left behind. APEC leaders must remember the poor men and women workers and farmers whose fate is in their hands. Asia’s poor and vulnerable are waiting for the time when economic growth means that they too can enjoy prosperity. We hope that APEC leaders have placed mechanisms for allowing the voices of poor people to be part of the conversation about real and lasting change.

Cherian Mathews, Citizen News Service - CNS  
26 November 2015
(Cherian Mathews is the regional director of the Asia office of Oxfam, an international non-profit organization that believes a future without poverty is possible)