Asian Development Bank is one of the institutions that have developed in Asia and the Pacific region. For the economic development of Asia and the Pacific region, the Asian Development Bank helps the development of different countries through various types of loans and financial grants. ADB supports regional problem-solving and regional integration and cooperation activities in various parts of Asia.
Background of Asian Development Bank (ADB)
The Asian Development Bank was established on December 4, 1965, with 31 countries for regional economic cooperation in Asia and the Pacific. Asian Development Bank member countries are 67. The operation of ADB started on November 24, 1966.
Sixty percent of the bank’s capital shares must be held from ESCAP countries and 40 percent from outside countries. The bank has a president, vice-president, governor, council, and management council.
The policy-making power rests with the Board of Governors and the day-to-day management of the bank rests with the Board of Directors. The Board of Governors meets once a year and the Board of Directors has 10 members. Seven of them are taken from Escape and three from outside regions.
The Board of Directors is responsible for providing loans, providing security for loans, and providing technical assistance. Its president is elected for five years and can be re-elected. The director’s term is two years.
Aims of Asian Development Bank:
The objectives of the Asian Development Bank are:
a. Facilitate effective investment of private and public capital for development purposes in the Asian region;
b. Provision of greater investment in projects in the least developed member countries;
c. Eliminate growth disparities between different regions;
d. To enhance cooperation between different regions;
e. Providing necessary technical assistance on specific projects; and
f. To maintain full cooperation and relations with the United Nations.
Functions of the Asian Development Bank:
Since its inception in November 1966, the Asian Development Bank has raised $165 billion in capital over the past 36 years. 47 countries have provided a part of this fund. Combined with paid-up capital and reserved funds, the bank has $3.8 billion. ADB does not lend capital. Lending is done from capital gains and receivables from the loan fund.
ADB borrows money from a variety of sources by guaranteeing the repayment commitments of customers who contribute to the bank’s capital. The bank collects loan funds in proportion to the demand for distribution for development.
Loans that ADB allocates are not immediately handed over to underwriters as one-time blinds; Rather, the allocation gradually goes to the borrowers according to the pace of project implementation. ADB does not leave any of the loan funds or proceeds idle. The bank is an active trader in currency markets all over the world. The bank’s total reserve fund is now over $155 billion.
ADB provides two types of development loans:
1. General loans are offered as borrowings at market rates.
2. The Asian Development Fund’s soft loans come from contributions from member countries.
Service charge is levied at the rate of 1 percent on the loan disbursed from the fund. Loans are given on easy terms at low interest rates for low national productivity countries. Typical loan tenure is 10 to 30 years. Project-based loan tenure is 50 years and program-based loan tenure is 25 years.
Challenges of ADB in the new century:
Meanwhile, the Asian Development Bank has been working successfully in regional development and progress in Asia. Therefore, ADB has adopted three main strategies to overcome the impact of the recent economic turmoil and face the challenges of the new century. Namely-
1. Poverty Alleviation in the Asian Region;
2. Prevention of environmental disasters and
3. Establishment of regional solidarity and cooperation.
1. Poverty Alleviation in Asia:
ADB’s main challenge is poverty alleviation in the Asia Pacific region. Its member states have also given importance to this problem as a national problem. Today, one-third of the world’s population lives in Asia. And this is why ADB has given importance to poverty alleviation in Asia. The causes of poverty in the Asia Pacific region are many and varied in nature. ADB has adopted three distinct strategies for poverty alleviation in Asia. Namely-
(a) Sustainable economic growth;
(b) Social development; and
(c) Good governance.
a. Sustainable economic growth:
The economic crisis in Southeast and East Asia has created major obstacles to Asia’s dynamic growth. Because increasing economic growth is no alternative to poverty alleviation. To get rid of this situation, ADB is taking various activities and providing necessary financial assistance.
Besides providing necessary financial support for science and Technological development, necessary investment, and the creation of financial stability. Apart from this, the development of the private sector is also one of the most important strategies of ADB. ADB’s private sector development strategy incorporates public-private partnerships, which are effective in almost all countries.
b. Social development:
Social development is the second pillar of ADB’s development strategy for the development of the Asia Pacific region and South and Southeast Asia. The main areas of social development are education, health, water and sanitation systems, shelter, and ensuring the safety of women and children. To ensure these areas, ADB has undertaken three strategic activities and part of these activities have been in place since 2001 with ADB’s funding. ADB’s activities are-
1. Social Protection Strategy (Social Protection Strategy):
2. Water Policy (Water Policy);
3. Gender and Development Action (Gender and Development Action).
c. Good governance:
The third pillar of the poverty alleviation program is the establishment of good governance. The main condition for the effectiveness of economic growth and social development strategies of any state is the good governance of that state. ADB therefore lends unconditionally to the rule of law and the protection of human rights.
2. Prevention of environmental disasters:
According to ADB, rapid population growth, rapid changes in production and consumption in the Asian region, unplanned industrialization, and rural-to-urban migration are the main causes of environmental problems. Therefore, sustainable development management of the environment for development in the new century is one of the tasks of ADB.
Several plans have also been adopted in this regard. ADB provides loans and other assistance for environmental development programs in developing countries. That is why ADB is maintaining regular communication with international organizations, NGOs, and various societies on environmental issues.
At the 2002 Earth Summit, ADB highlighted the environmental problems of countries in the Asia-Pacific region and sought help from various international forums. Japan has announced extensive economic cooperation in this regard.
3. Enhancing Regional Cooperation:
Addressing regional issues in different parts of Asia and enhancing regional integration and cooperation activities is the third challenge step of ADB. ADB’s charter guarantees responsibility for various cooperative activities. This charter mentions, by ensuring regional cooperation, by strengthening the economy in the best use of regional resources, and by expanding foreign aid, by creating conditions for specific intra-regional trade.
Therefore, in the 2001 annual report, ADB placed the highest importance on regional trade in the economic development of the region. In addition, several regional organizations in Asia have shown that the expansion of regional trade essentially minimizes the risks of the globalization process.
For example, ASEAN and ASEAN+3 have been able to achieve massive economic development at the regional level. Therefore, ADB is cooperating with the ASEAN region’s mutual trade. At the sub-regional level, ADB has undertaken cooperative economic projects to support South Asian sub-regional cooperation and regional activities in Central Asia.
The then president of ADB, Masatsugu Asakawa, said in a conference in China that ADB will move towards regional trade with India and small island states in the Pacific region. Therefore, in this era of globalization, economists believe that by pushing away the influence of free trade, ADB will help promote the development of Asian countries through regional integration.
The warming of regional politics and the expansion of free trade in this phase of globalization have left ADB’s developing member states in Asia somewhat vulnerable to development, both internally and externally. ADB’s activities will greatly help develop poor countries in such a situation.
A few years ago ADB president visited Sri Lanka and Afghanistan. ADB’s financial cooperation has contributed significantly to the infrastructure development of these two countries. Apart from this, ADB activities are running in almost all countries.
Asian development Bank’s Evaluation of strategies:
ADB has played an important role in the socio-economic development of underdeveloped and developing countries in Asia.
1. In terms of organizational structure:
ADB has taken reform measures since early 2001 to strengthen its operations. It is researched by identifying the causes of poverty in developing countries and with the necessary mandate, and based on its findings; it is conducting its activities in a new way from January 1. Which includes the rural infrastructure of developing countries, government system, women’s development and empowerment, environmental risks, etc. are considered anew and cooperative activities are taken to solve them.
2. Alignment with internal activities:
Asian Development Bank changed the way member states cooperated in 2002. Previously, ADB used to carry out financing individually according to its time frame, but this has been changed. At present, ADB’s operations are carried out in conjunction with other operations in the respective regions. For example, ADB has helped some countries with their manpower in their bank reform programs. In terms of infrastructure, local activities have also been strengthened by increasing engagement with local NGOs and civil society.
3. Lending:
Earlier ADB used to operate pool pool-based lending program, but now it has given up LBL-based lending since 2001 and has made interest rates easier than the pool. Apart from that, the benefits of the member states in the loan program have also been increased.
4. In terms of monitoring:
Since 2001, the Asian Development Bank has been monitoring each of its activities. A steering committee and working group have been formed for this. The success and effectiveness of various activities are monitored by this committee. In addition to government officials, representatives from civil society and NGOs have also been included. With their help, ADB activities are evaluated and the next steps are taken.
5. ADB’s Special Actions:
ADB undertakes special cooperation programs to address the devastation of September 11 and its economic impact, the post-attack crisis in Afghanistan, and the post-civil war reconstruction of Sri Lanka.
Conclusion:
From the above discussion, it can be said that the Asian Development Bank’s development activities and cooperation in recent times have had an important impact on poverty alleviation in developing countries and member states. In addition to poverty alleviation, environmental and social development are playing a similar role, which has enabled countries in the Asia Pacific region to escape the grip of poverty. If ADB overcomes the minor problems, its activities can be more extensive and the objectives of this organization will be successful. As a result, the poverty rate of the developing world will decrease, and the growth rate will also increase, with which all the challenges of globalization can be faced.