Addressing Asia’s vast inequality

BANGKOK - Recent riots in Sweden - by some measures the most “equal” nation on earth - raise interesting questions about the state of equality in Asia, including in Korea, that are well worth pondering.

For several days, the Scandinavian nation, perhaps better known for the songs of ABBA sung regularly in Seoul’s karaoke bars and as the home of the Nobel Prizes than for scenes of unrest, was rocked recently by violent protests. By some accounts, unemployed youth in predominantly immigrant neighborhoods were among those setting buildings and cars ablaze, perhaps testimony to the reality that inequality exists everywhere.

The news also had me revisiting the latest rankings of inequality in Asia.

Stockholm is a world away from the extreme poverty that exists in parts of Asia. But whether in Beijing or Seoul, further discussion and actions may well be needed to address what some perceive as a persistent, if not growing, divide between the haves and the have nots, between the connected and disconnected, and between the educated and uneducated across the region.

The inconvenient truth is that the majority of the world’s poor people live in Asia. The continent is home to two-thirds of the world’s poor, and an estimated 1.7 billion people still struggle to survive on less than $2 a day, according to the Asian Development Bank (ADB). From urban slums to impoverished rural areas, hundreds of millions still live on less than $1 a day.

Too often, ethnic minorities and indigenous peoples are among those who remain marginalized and excluded from the benefits of the region’s growth. This remains the case in many parts of Asia.

By some measures, more than 40 percent of the Asia-Pacific region’s population still does not have access to improved sanitation facilities. Deteriorating sanitation, environmental conditions, and inadequate housing and infrastructure also characterize Asian cities unable to keep up with migration and population growth.

At the end of the day, access to education and a strengthened business environment - including sustained steps to improve the bureaucracy, fairly enforce regulations, limit intervention by government, and fight corruption and cronyism - will be critical for poverty reduction.

Now based at a regional institute in Thailand after serving as U.S. ambassador to the Asian Development Bank, I was struck by the answers from a group of young college-aged students when I posed the question, “Which nation in Asia is the most ‘unequal’ when it comes to the much-discussed Gini coefficient, or index - a measure of income inequality?”

India, Vietnam and Pakistan were among the responses. How, I wonder, would Korean university students respond to that question? Perhaps, like those Thai students, many in Korea would be surprised by their own nation’s ranking on the list of the most “unequal.”

According to the CIA World Factbook, the widely referenced resource Web site, while Namibia, South Africa and Lesotho in sub-Saharan Africa top the charts as the most unequal in the world, the latest reported data has Hong Kong and Thailand as the most unequal places in Asia.

Ranked as No. 11 and No. 12 most unequal in the world, Hong Kong and Thailand are followed in Asia by No. 18 Papua New Guinea of the 136 ranked territories and nations. Korea is ranked as the 51st most unequal. Sweden is described as having the most equal distribution of average family income.

Some of these figures are startling. Indeed, the rankings underscore one of the fundamental challenges of policy. That is, the accuracy and timeliness of data. The numbers are only as good as the source data.

According to an ADB report, inequality in Asia has widened in 12 of 28 economies with comparable data, including the three most populous countries and the drivers of the region’s rapid growth, namely China, India and Indonesia.

So, does the “official” Gini index really matter as much as trends and attitudes as to whether or not things are getting better? Critically, Asia’s leaders must also focus on drivers of unequal of opportunity. These may well include access to public services, such as education, electricity, water and sanitation.

With the twin “genies” of technological progress and globalization - key drivers of growth and inequality - long out of the bottle, there is no putting them back in. In answering the question as to whether inequality matters, all of us in Asia will be better able to define who we are - whether as individuals, a country, or a region.

In doing so, we may well find no agreement on how much inequality society should tolerate, and on whether an unequal distribution of wealth is better, or worse, than an equal distribution of poverty. That conversation, though, is well worth having, whether in Stockholm or Seoul.

* The author was U.S. Ambassador to the Asian Development Bank (2007-10) under Presidents George W. Bush and Barack Obama. He is senior fellow and executive-in-residence at the Asian Institute of Technology, and a managing director with advisory firm RiverPeak Group, LLC.

by Curtis S. Chin