Inequality in Asia and the Pacific : Trends, Drivers, and Policy Implications

Abstract

The Asia and Pacific region has recorded remarkable achievements in growth and poverty reduction in recent decades. From 1990 to 2010, the average annual growth rate of the gross domestic product (GDP) for developing Asia reached 7.0% in terms of 2005 purchasing power parity (PPP) dollars, three times as high as that for the Middle East and North Africa at 2.4% and more than double that for Latin America and the Caribbean at 3.2% (Figure 1.1). Much of the growth was driven by the People’s Republic of China (PRC) and India – the world’s two most populous countries – with annual GDP growth of 9.9% and 6.3%, respectively. Developing Asia’s outstanding growth performance has played a critical role in pulling the global economy out of recession quickly during the recent global economic crisis. This rapid growth has significantly improved living standards and reduced extreme poverty. During 1990–2010, the region’s average per capita GDP in 2005 PPP terms increased from $1,602 to $4,982. The proportion of the population living on or below the $1.25-a-day poverty line fell from 54% in 1990 to 22% in 2008, as 700 million people were lifted out of poverty. Taking the $2-a-day poverty line, the poverty rate declined from close to 80% to about 45%. Seventeen countries reduced poverty during the period by more than 15 percentage points at either poverty line.