Business | Opinion
Reinventing Asian Development Bank
Old international institutions never die; they just fade away. Yet this is not the only alternative: they can also reinvent themselves, thereby gaining a new relevance.
- Financial Times
- Published: 00:00 May 10, 2007
Old international institutions never die; they just fade away. Yet this is not the only alternative: they can also reinvent themselves, thereby gaining a new relevance.
This is a challenge for all such institutions. It is particularly true today for the Asian Development Bank, an institution set up to serve a once desperately poor region that is now the world's most dynamic.
Can the ADB change and, if so, how should it do so? Those questions were addressed by the report of an eminent persons' group commissioned by Haruhiko Kuroda, ADB president, chaired by Thailand's Supachai Panitchpakdi, published in March and discussed intensively at the annual meeting in Kyoto over the weekend.
The group was asked to consider the role of the ADB in 2020. Unless something dramatic happens, more than 90 per cent of those now living in the huge region will by then live in middle-income countries.
The group suggested that the ADB had to be transformed, moving from fighting mass poverty to supporting faster and more inclusive growth, from growth to environmentally sustainable growth and from a primarily national to a regional focus. To achieve these ends, it recommended concentrating on infrastructure, financial development, energy and the environment, regional integration, technological development and knowledge management.
Critics at the annual meetings objected to what was excluded - the suggested moves away from poverty, health, education and gender equality, in particular.
The ADB must not cease supporting the region's poor and fragile states. But an institution that tries to meet every demand in all countries will end up failing. Focus is essential.
Critics questioned, too, the wisdom of moving from a national to regional approach. This, too, is a matter of emphasis. But the provision of cross-border public goods, such as infrastructure, is ideally suited to the sole institution that covers the entire region.
A more compelling criticism was that the EPG's list is too broad. It is hard to imagine, for example, what the ADB would add to technological development. Equally, it is difficult to see what the ADB could contribute to the management of the region's vast (indeed, excessive) foreign currency reserves.
The report is imperfect. It is surprising, for example, that it omitted support for the private sector, particularly in facilitating public/private partnerships, where the ADB has already had successes. But it provides an excellent start to a necessary debate.
The ADB must change, as Asia itself is doing, or fade into irrelevance. The report has defined the challenge ahead. The shareholders must use the next year to agree on how to meet it.
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