Poverty and Sustainable Development in Asia Impacts Crisis the Global and Responses Economic to in Asia and Sustainable Development Poverty Impacts and Responses to the Global Economic Crisis On 28–30 September 2009, the Asian Development Bank,the governments of the People’s Republic of China and Viet Nam, and the ASEAN Secretariat jointly organized a high-level Asia-wide conference in Ha Noi on the social and environmental impact of the global economic crisis on Asia and the Pacific, especially on the poor and vulnerable. The conference also served as the 3rd China-ASEAN Forum on Social Development and Poverty Reduction and as the 4th ASEAN+3 High-Level Seminar on Poverty Reduction. It was supported by various development partners. This book features selected papers from the Ha Noi conference. It is designed with the needs of policy makers in mind, utilizing field, country, and thematic background studies to cover a large number of countries and cases. It is complemented by a website comprising more information about the conference, and all the papers presented there: www.adb.org/ Poverty and Sustainable Documents/Events/2009/Poverty-Social-Development/default.asp. Development in Asia Impacts and Responses to the Global Economic Crisis Edited by Armin Bauer and Myo Thant Asian Development Bank 6 ADB Avenue, Mandaluyong City 1550 Metro Manila, Philippines www.adb.org Asian Development Bank Institute Kasumigaseki Building 8F 3-2-5 Kasumigaseki, Chiyoda-ku Tokyo 100-6008, Japan www.adbi.org ISBN 978-971-561-900-4 Publication Stock No. RPT091220 Printed in the Philippines Poverty and Sustainable Development in Asia Impacts and Responses to the Global Economic Crisis Edited by Armin Bauer and Myo Thant ©2010 Asian Development Bank All rights reserved. Published 2010. Printed in the Philippines. ISBN 978-92-9092-065-6 Publication Stock No. RPT091220 Cataloging-In-Publication Data Asian Development Bank Poverty and sustainable development in Asia: impacts and responses to the global economic crisis. Mandaluyong City, Philippines: Asian Development Bank, 2010. 1. Economic crisis. 2. Poverty. 3. Sustainable development. 4. Asia. I. Asian Development Bank. The views expressed in this book are those of the authors and do not necessarily reflect the views and policies of the Asian Development Bank (ADB) or its Board of Governors or the governments they represent. ADB does not guarantee the accuracy of the data included in this publication and accepts no responsibility for any consequence of their use. By making any designation of or reference to a particular territory or geographic area, or by using the term “country” in this document, ADB does not intend to make any judgments as to the legal or other status of any territory or area. ADB encourages printing or copying information exclusively for personal and noncommercial use with proper acknowledgment of ADB. Users are restricted from reselling, redistributing, or creating derivative works for commercial purposes without the express, written consent of ADB. Note: In this report, “$” refers to US dollars. Asian Development Bank 6 ADB Avenue, Mandaluyong City 1550 Metro Manila, Philippines Tel +63 2 632 4444 Fax +63 2 636 2444 www.adb.org For orders, please contact: Department of External Relations Fax +63 2 636 2648 [email protected] Contents Preface vii Acknowledgment x Overview Myo Thant and Armin Bauer 1 Section I: The Impact The impact of the world recession on Indonesia and an appropriate policy response: Some lessons for Asia Gustav F. Papanek and M. Chatib Basri with Daniel M. Schydlowsky 13 Impacts of the economic crisis in East Asia: Findings from qualitative monitoring in five countries Carrie Turk and Andrew Mason 51 Social impact of commodity price volatility in Papua New Guinea Dominic Patrick Mellor 77 Assessing social outcomes through the Millennium Development Goals Shiladitya Chatterjee and Raj Kumar 97 Section II: Labor and Gender The impact of the global economic slowdown on value chain labor markets in Asia Rosey Hurst, Martin Buttle, and Jonathan Sandars 113 Global meltdown and informality: An economy-wide analysis for India—Policy research brief Anushree Sinha 131 The social impact of the global recession on Cambodia: How the crisis impacts on poverty Kimsun Tong 141 Women facing the economic crisis— The garment sector in Cambodia Sukti Dasgupta and David Williams 149 iv Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis No cushion to fall back on: The impact of the global recession on women in the informal economy in four Asian countries Zoe Horn 169 Gender and social protection in Asia: What does the crisis change? Nicola Jones and Rebecca Holmes, with Hannah Marsden, Shreya Mitra, and David Walker 187 Section III: Migration and Remittances The impact of the global slowdown on the People’s Republic of China’s rural migrants: Empirical evidence from a 12-city survey Xiulan Zhang and Steve Lin 203 Urban–rural and rural–urban transmission mechanisms in Indonesia in the crisis Megumi Muto, Shinobu Shimokoshi, Ali Subandoro, and Futoshi Yamauchi 219 The global financial crisis and agricultural development: Viet Nam Dang Kim Son, Vu Trong Binh, and Hoang Vu Quang 229 Impact of the global recession on international labor migration and remittances: Implications for poverty reduction and development in Nepal, Philippines, Tajikistan, and Uzbekistan Andrea Riester 239 Section IV: Responses Global crisis and fiscal space for social protection Armin Bauer, David E. Bloom, Jocelyn E. Finlay, and Jaypee Sevilla 257 Addressing unemployment and poverty through infrastructure development as a crisis-response strategy Chris Donnges 275 Fiscal space for social protection policies in Viet Nam Paulette Castel 299 The global economic crisis: Can Asia grasp the opportunity to strengthen social protection systems? Mukul G. Asher 319 Contents v Income support in times of global crisis: An assessment of the role of unemployment insurance and options for coverage extension in Asia Wolfgang Scholz, Florence Bonnet, and Ellen Ehmke 341 Financial crisis and social protection reform—Brake or motor? An analysis of reform dynamics in Indonesia and Viet Nam Katja Bender and Matthias Rompel 367 Reforming social protection systems when commodity prices collapse: The experience of Mongolia Wendy Walker and David Hall 389 The impact of the global recession on the health of the people in Asia Soonman Kwon, Youn Jung, Anwar Islam, Badri Pande, and Lan Yao 405 The impact of the global recession on the poor and vulnerable in the Philippines and on the social health insurance system Axel Weber and Helga Piechulek 425 Implications of economic recessions on quality, equity, and financing of education Jouko Sarvi 441 Section V: The Environments of the Poor Impact of the global recession on sustainable development and poverty linkages V. Anbumozhi and Armin Bauer 453 Green growth, climate change, and the future of aid: Challenges and opportunities in Asia and the Pacific Paul Steele and Yusuke Taishi 471 Measuring the environmental impacts of changing trade patterns on the poor Kaliappa Kalirajan, Venkatachalam Anbumozhi, and Kanhaiya Singh 491 Poverty, climate change, and the economic recession Benoit Laplante 507 Alternative energy options of Asia in crises Kaoru Yamaguchi and Miki Yanagi 521 vi Poverty and Sustainable Development in Asia: Impacts and Responses to the Global Economic Crisis List of Boxes Box 1: Philippines: Monitoring poverty and social protection Mahar Mangahas 50 Box 2: Bangladesh Nazneen Ahmed and Mustafa K. Mujeri 76 Box 3: Uzbekistan Jhanna Fattakova 96 Box 4: Projecting the poverty impact of the recession Guanghua Wan and Ruth Francisco 111 Box 5: Thailand’s automotive industry Archanun Kohpaiboon et al. 140 Box 6: Impact on women: Field studies Samantha Hung 168 Box 7: Pakistan Idress Khawaja 186 Box 8: The Philippines’ electronics sector M. Lopez 218 Box 9: Informing the health systems reform agenda: The role of an Asia–Pacific observatory Rebecca Dodd and Henk Bekedam 404 Box 10: Health security: Thailand Reisuke Iwana 440 Preface The worst economic crisis since the Great Depression hit Asia and the Pacific in 2008–2009. Exports declined, economic growth contracted in many countries and is still at a lower level than in the last decade. While growth has rebounded—albeit at a lower rate—the crisis has revealed structural problems of a growth process in Asia that is not inclusive enough. The 2008/09 global economic crisis is different from the 1997/98 Asian financial crisis in many ways. It affected people mainly through changes in labor markets, return migration, loss of social protection, and worsening social fabric. Unlike the earlier crisis when the domi- nant labor market effect was a sharp decline in real wages, in the more recent crisis the dominant impact was of reduced employment and hours worked. The crisis may also have long-term effects on the achievement of the Millennium Development Goals. Furthermore, there are specific gender patterns, with both women (especially in the garment and electronic sectors) and men (in the automobile parts and construction sectors) being affected. Finally, the crisis had spatial and demographic patterns by affecting urban migrants, young educated people, and the poor and vulnerable groups. There is also an impact on rural areas. The crisis shows the region’s social and economic deve- lopment sustainability being constrained by structural problems of dualistic labor markets and weak social protection systems. The crisis revealed prevailing gender patterns. Women benefited greatly from globalization, which created new job opportunities for them in modern export industries. However, those jobs were often low-paid, low-skilled, and vulnerable. In the crisis, women were fre- quently the first exposed to retrenchments and reduced pay in export industries like garments or electronics. Reduced opportunities in the informal sector also lowered women’s opportunities in the labor mar- ket, while at the same time their responsibilities to care for the families were exposed to new challenges due to the lack of formal social safety nets.