1. Inclusive Growth: Theory and Practice Vinod Thomas, Director General Asian Development Bank 1

2. Constraints Facing Asia Around 1.6 billion people living under $2 a day Inequality on the rise Environmental degradation Runaway climate change an aggravating trend Sluggish productivity growth 2

3. Rising Income Inequality 3 Widening income inequality within countries Increased substantially since 1990 in most developed world but remained stable in EMDCs Marked increases in Asia and Europe Latin America declined but remains the most unequal Overall, increased in advanced economies by an average of 5.25 Gini points Change in Net Gini Index, 1990-2012 Sources: Norris et al. 2015. Causes and Consequences of Income Inequality: A Global Perspective. IMF Staff Discussion Note.

4. Skewed Wealth Distribution 4 Highly skewed global wealth distribution – which also means high wealth inequality China dominates the upper middle section of global wealth distribution accounting 40%, which is in contrast with India. North America and Europe are heavily skewed toward the top tail. In “Capital in the Twenty-First Century”, Piketty argues that “there is no reason to think that capitalism will naturally reverse rising inequality.” Regional composition of global wealth distribution, 2014 Source: James Davies, Rodrigo Lluberas and Anthony Shorrocks, Credit Suisse Global Wealth Databook 2014

5. Why Inequality Matters Stifles growth Minimizes impact of growth on poverty Undermines social cohesion GDP change from 1% point income rise Source of Data: Norris et al. 2015. Causes and Consequences of Income Inequality: A Global Perspective. IMF Staff Discussion Note. 5

6. Drivers of Growth Can Fuel Inequality Economic globalization Technological advancement Bias for capital resources 6

7. Decelerating Productivity Growth 7 TFP Growth (%) 1996- 2006 2007- 2012 2012200132014 World1.30.5-0.10.0-0.2 Japan0.70.20.71.0-1.2 So. Korea3.02.0-3.23.00.6 China4.42.70.40.1-0.1 India1.32.7-0.7-0.50.2 Developing Asia 1.00.21.30.40.6 Source: Total Economy Database™ - Data, The Conference Board

8. What is Inclusive Growth? Social protection e.g. conditional cash transfers Inclusive Growth Not any, but broad based growth High growthAccess to opportunities: health and education 8

9. Thailand: Challenges to Inclusive Growth Despite attaining upper middle income- status, growth has slowed since late 1990s Hurt by global economic shocks Sociopolitical tensions have dampened investment levels Real GDP Growth, 1966-2014 (%) 9 Source: WB-WDI, ADB

10. Urban-rural divide, access to education and health, ageing population and adverse climate-related events Thailand: Challenges to Inclusive Growth 10 Income Distribution Source: WB-WDI, ADB Income and Education Source: NESDB of Thailand, ADB

11. Thailand: Slowing Productivity 11 Cereal Yield, 1961-2013 (kg./ha.) TFP Growth (%) 1996- 2006 2007- 2012 2012200132014 World1.30.5-0.10.0-0.2 So. Korea3.02.0-3.23.00.6 China4.42.70.40.1-0.1 India1.32.7-0.7-0.50.2 Malaysia2.10.51.5-0.90.8 Thailand2.40.34.00.6-0.8 Philippines1.41.22.93.01.5 Vietnam-0.4-1.9-2.0-1.9 Source: Total Economy Database™ - Data, The Conference Board Source: FAO

12. Policies to Enhance Thailand’s Inclusive Growth Raising the levels of employment and wages Widening investments in social capital Promoting environmentally sustainable growth Harnessing emerging Asian markets for broader income and employment growth 12

13. Raising Employment and Wages Poverty largely concentrated in rural areas, 16% vs. 9% in urban areas Raising agriculture productivity leading to higher employment and income for more inclusion Upgrading and deepening manufacturing and services sectors for higher value addition 13

14. Widening Investments in Social Capital Considerable inequality in access to urban-rural education ◦ Net enrollment rate in tertiary education is 39.5% in rural areas vs. 18% in urban Harnessing private sector resources via PPP in widening access to and quality of healthcare and education 14

15. Environmentally Sustainable Growth Strengthening community-based integrated water and flood risk management Investing in solar, wind and natural gas energy Managing and preserving biodiversity corridors 15

16. Harnessing Emerging Asian Markets Expanding regional linkages for broader income and employment growth Facilitating regional integration of transport, energy/power, production/value chains, capital markets 16

17. Thank You! Download thru links 17 Learning Lessons: To Foster Inclusive Growth, Tackle Inequality and Climate Change: http://www.adb.org/sites/default/files/evaluation- document/160706/files/learning-lessons-inclusive-growth.pdf Inclusion, Resilience, Change: ADB’s Strategy 2020 at Mid-Term: http://bit.ly/irc-strategy2020 Infrastructure lending must be based on environmental and social safeguards: http://bit.ly/safeguards-brookings ADB's Support for Inclusive Growth: http://www.adb.org/sites/default/files/evaluation- document/89401/files/ces-safeguards.pdf Evaluation for Better Results 2014: http://www.adb.org/publications/evaluation-better-results 17

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