ADB’s “inclusive growth”: of the 1%, by the 1%, for the 1% – FDC
Activists hit “Anti-Development Bank” on ADB’s Annual Governors Meeting
On its Annual Governors Meeting (AGM) this year, the Freedom from Debt Coalition holds the Asian Development Bank (ADB) accountable for the Philippine’s and most of Asia’s development crisis and poverty.
ADB’s theme is centered on promoting “inclusive growth” – the flavor of the month in international capitalist financial institutions’ circles like those of the IMF-World Bank – through what they call better governance and partnerships.
Truth is, “inclusive growth” is a recycled version of the “ rapid growth with trickle down approach “ which global capitalist powers and IFIs have pushed in the 1980s to the 1990s in most countries of the South along with the principle of neo-liberalism following the political and economic reversals of countries and movements promoting social and economic redistribution as the way forward.
Now this formula is a massive pile of economic and theoretical rubbish, an utter failure in lifting most countries of the South from poverty, indebtedness, maldevelopment and unceasing internal political conflicts. Neo-liberalism, the dogma of free market and minimal state, is likewise in crisis in the wake of the most serious financial and economic crisis hitting the heartland of global capitalism – the US and Europe, since the 1930s.
How is ADB’s “inclusive growth” not actually “inclusive”? First, ADB’s “inclusive growth” calls for the aggressive removal of all constraints to growth like freeing up the market from the distortions created by corruption and rent-seeking practices in government. Yet, it turns a blind eye to the much larger constraints created by ADB and IMF-WB debt conditionalities which stunt agriculture and industry by imposing privatization in economies where long-entrenched monopolistic oligarchs and their global partners could easily gobble up capital and markets to the exclusion of the rest of the population including the small and medium scale entrepreneurs. Because these economies cannot develop in a sustained way, they are led to a condition of inexhaustible indebtedness—incurring more debts , through bonds or institutional debts – to repay old debts and finance the investment needs of global capital inside their countries.
Second, ADB’s “ inclusive growth “ discredits income and asset redistribution to favor what it calls “ productive employment “ through rapid growth. While growth can reduce unemployment, it can also create more unemployment. It really depends on what kind of growth is being promoted. By focusing on the growth of BPOs and other external market-driven services and mining, jobs in industry and agriculture are destroyed without a corresponding employment generation and development. This is a Philippine experience which produces massive unemployment and underemployment.
Third, ADB’s “inclusive growth” seeks to coopt a component of the pro-poor strategies which are critical of the” rapid growth with trickle down “ approach.
That component is direct measures of welfare and distribution. However, the the kind of direct measure that is promoted remains to be perverse. In the Philippines for instance, the poverty intervention of this financed by ADB would be the Conditional Cash Transfer (CCT) programs mutated from its original form. CCT is not unconditional and universal – two basic requirements for being Rights-based. Instead, it downgrades the self-worth of its beneficiaries and makes them vulnerable to more patronage and manipulation by the powerful.
Worse, it is not even redistributive: it is not linked to any asset reform program because it is not financed through progressive taxation. There is no net transfer of wealth from the rich to the poor. In fact, being debt-financed, it merely transfers wealth from the future poor – if regressive taxation policies are not removed – to the poor now. As a social justice mechanism, CCT as ADB’s instrument for inclusive growth fails in this respect.
If ADB’s current “inclusive growth” policy is not actually inclusive, then why should anyone subscribe to its prescriptions? No one should. In fact, ADB’s policy prescriptions have resulted to an ever-widening gap between the rich and the poor via giving the rich access to utilities previously owned by governments – utilities that allow them to extract rent from natural monopolies and oligopolies. It simply has no moral ascendancy on promoting anything “inclusive”.
In power, for instance, ADB approved in 1998 a US$300-million loan for Power Sector Restructuring Program (PSRP) in the Philippines to address the heavy indebtedness of NPC, rising cost of electricity and inefficient delivery of electricity service. In return, PSRP gave a big push for the enactment of the Electric Power Industry Reform Act (EPIRA) to privatize the debt-ridden NPC and restructure the power industry. More than a decade after, the Philippines is facing the highest power rates in Asia, with the sector now under the tight grip of an entrenched oligopoly that EPIRA is supposedly against: the Lopez and Aboitiz families who reaped super-profit bonanzas from the cross-ownership of power generation and distribution. Manny V. Pangilinan controls ownership of Meralco, the distribution super-monopoly of Luzon. Danding Cojuangco grabbed 30 percent of power generation in Luzon. Henry Sy effectively controls the country’s transmission line along with the Government of China. Inclusive growth, anyone?
In food, ADB’s Grain Sector Development Program (GSDP) irresponsibly pushed for the privatization of the National Food Authority (NFA) and the liberalization of grain trading, in the process encouraging greater private investment in the sector. Years later, we have the previously rice-exporting Philippines emerging as the top importer of rice, blamed by the world for causing the worldwide rice crisis. Who gains from high rice prices? Rice traders like the Binondo 7 and emerging cartels in Visayas and Mindanao reaped windfall profits. Inclusive growth?
And the list goes on and on for the water, climate, and public finance sectors. In the end, ADB has no moral ascendancy to claim that it can work for “inclusive growth”. ADB has worked for and continues to work for the rich, powerful 1% – and like the Goldman Sachs had been in the United States, it has denied the 99% access to welfare and real opportunities to live decent and secure human lives.
ADB is clearly anti-development: its’ wrong prescriptions led to high power and food prices which continue to erode Filipino’s purchasing power and sabotage our attempts to create a robust domestic market which can promote a sustainable industrial, agricultural and service development. ADB is clearly anti-poor: its’ policies resulted to oligopolies entrenched in various economic and social sectors, increasing the inequality in Asian nations already suffering from the mal-governance of its respective elites.
ADB is a failure. Only by recognizing the fact that ADB has lost its legitimacy as a supposedly instrument for development and shunning its interventions that impoverished Asian countries like the Philippines can chart a truly strategic pathways to real humane development.
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