Bron: http://www.theguardian.

com/world/economics-blog/2012/apr/11/asia-growth-story-china-
india

Asian growth story doesn't have to follow

the western model
Asian Development Bank, which works to reduce poverty in the region, warned that rising
inequality could soon undermine the very basis of these countries' economic success

 Share 7



 inShare0
 Email

China's ultra-rich fly into Sanya, for the annual Hainan Rendez-Vous yacht and jet show.
Photograph: Imaginechina/Corbis

Given that China and India have achieved extraordinary improvements in living standards for
millions of the poorest people in the world over the past two decades, it may seem churlish to
berate both countries for creating a few millionaires along the way.

But the Asian Development Bank, which works to reduce poverty in the region, warned today
that rising inequality could soon undermine the very basis of these countries' economic
success.

The ADB's intervention is one contribution to an increasingly lively global argument that
narrowing the gap between rich and poor is not just a social or political imperative, it is an
economic necessity.
That's true for two reasons. First, an ever-growing gap between rich and poor is likely to have
explosive political consequences, particularly when the poor in question are living on the
breadline.

China's latest five-year plan, which aims at a slower but more equitable economic growth, is
an acknowledgement that Beijing must address the concerns of millions of disenfranchised
and frustrated rural poor, or face the potential for rising unrest.

Or as the ADB puts it, in a rather more circumspect way, if Asian governments fail to make
growth fairer, they may be, "pulled into inefficient populist policies, which will benefit
neither growth nor equity".

But secondly, as Stewart Lansley argued in a recent book, concentrating resources in the
hands of a wealthy few is a bad strategy for achieving economic growth. The rich tend to save
their cash, or tie it up in unproductive assets such as yachts; whereas the poor spend every
penny they get, boosting consumer demand and generating more jobs along the way.

Having a large proportion of the adult population uneducated and lying idle, or trapped in
rural backwaters far from the economic action, is not just socially unjust, it's economically
mad.

The west has learned the hard way in the past five years that unleashing a super-rich elite and
hoping they'll drag the rest of the economy behind them doesn't work. As they continue to
develop, the Asian nations have the chance to show there's a better way.