Rich Growing Richer Faster Than Poor in Developing Asia

Picked up on Weitzenegger’s Website for International Development Cooperation, and its Newsletter.

an Asian Development Bank Study

BEIJING, PEOPLE’S REPUBLIC OF CHINA – The rich are growing richer faster than the poor in developing Asia, and widening disparities in standards of living can threaten the growth process in one of the most dynamic regions of the world, says a new ADB report.

Key Indicators 2007, the flagship annual statistical publication of the Asian Development Bank, says the poor are still lagging behind in the region’s rapid development even as poverty rates decline. Both relative and absolute inequality have increased in most parts of developing Asia, the report adds. While relative inequality is concerned with proportionate differences in incomes, absolute inequality is concerned with actual dollar differences in incomes.

Relative inequality as measured by the Gini coefficient has risen significantly in Bangladesh, Cambodia, the People’s Republic of China (PRC), Lao PDR, Nepal and Sri Lanka between the 1990s and 2000s (see chart).

In the case of the PRC, the Gini coefficient is estimated at around 47 in 2004, closer to figures associated with Latin American economies and less reminiscent of the “growth with equity” experience of developing Asia’s original newly industrializing economies, such as the Republic of Korea and Taipei,China.


In the case of the PRC, the Gini coefficient is estimated at around 47 in 2004, closer to figures associated with Latin American economies and less reminiscent of the “growth with equity” experience of developing Asia’s original newly industrializing economies, such as the Republic of Korea and Taipei,China.

Absolute inequality has increased virtually everywhere between the 1990s and 2000s. One consequence of this is that the most well-off have experienced considerably larger increases in their standards of living than the least well-off. For example, the expenditures of the “rich” (top 20%) have increased much more than those of the “poor” (bottom 20%). This has happened even in countries such as Indonesia and Malaysia where relative inequality declined (see chart).

“In a region as dynamic and vibrant as developing Asia, low growth in incomes of the poor is reflective of weakness in the pattern of growth,” says Ifzal Ali, ADB Chief Economist. “Growing inequalities can weaken social cohesion.” … (full text).

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