ADB to PH: Do more to boost economic growth

MANILA, Philippines—The Asian Development Bank has challenged developing countries like the Philippines to step up efforts to boost economic growth and consequently escape the “middle-income trap” they are caught in.

In one of the discussions during the recently concluded 44th Annual Meeting of the Board of Governors of the ADB, economists noted that many Asian countries have remained middle-income earners.

ADB said in a statement that while the transition by several countries in the past decades from low- to middle-income status has lifted many Asians out of poverty, these economies have to speed up the process toward the developed status to pull out even more people from poverty.

Ursula Schaefer-Preuss, ADB vice president for knowledge management and sustainable development, said there were still 1.8 billion Asians living below $2 a day.

In the case of the Philippines, the economy has grown by an average of 4 to 5 percent a year in the past decade. Despite this, the proportion of Filipinos living below the poverty line has even slightly increased.

Latest government data showed that poverty incidence in the Philippines stood at 26.5 percent in 2009 from 26.4 percent in 2006 and 24.9 percent in 2003.

ADB said one of the factors keeping some Asian countries in the middle-income trap is the loss of competitive advantage in cost of production.

“…middle income countries cannot compete with low-cost producers at the lower end of the market or with advanced nations at the higher end of the market,” Shaefer-Preuss said.

ADB said a key strategy to boost growth is to engage the private sector in development efforts. There should be a campaign to awaken the “sleepy private sector” and to develop human capital, one official said.