A Different Route: Reimagining the idea of prosperity in Asia

8/20/2019 A Different Route: Reimagining the idea of prosperity in Asia

1/28

OXFAM BRIEFING PAPER 13 NOVEMBER 2015

www.oxfam.org

A DIFFERENT ROUTEReimagining the idea of prosperity in Asia

Harvest season in Northern Vietnam. Credit: Cong Hung / Oxfam

EMBARGOED UNTIL 00:01 HRS GMT 13 November 2015

As ia i s home t o s ome of th e world’s f ast est growing economies .Yet millions of people remain poor, while a handfu l get ric her and richer.

As ia needs a development paradigm that leaves no one behind – not theworkers and farmers, who act as the driving f orce behind Asia’s growt h –and certainly not the women, who take on the lowest-paying jobs in theregion. This paradigm must also consider constr aints, particularly t heearth’s nite natural resources, which future generations need to survive.It must move away from carbon dependence and mus t anticipate andplan for the impacts of climate change. These principles t ogether in forminclusive and sustainable development, which Asian governments can us eas a roadmap to transform their respective societies in an era of vanishingresources and staggering inequalities.


2/28

1

SUMMARYEconomic growth is creating jobs and generating wealth across Asia.However, poverty amidst plenty continues to persist. Even with the

increasing development and bountiful resources, millions are being leftbehind. Workers and farmers remain mired in poverty despite – andperhaps because of – their role as the engine behind the very growththat is marginalizing them. Amidst the prosperity created in economiesacross the region, inequality continues to rise. Meanwhile, pollution, theclearing of forests, and the over-use of natural resources is endangeringthe environment that the economy depends upon.

There is hope. Inclusive and sustainable development (ISD) is possible,if driven by an economy and society that prioritizes opportunities forthose left behind; one that addresses gender discrimination and socialexclusion, and aims for a fairer economy, not just a larger one. Thisrequires bold but necessary steps to be taken by governments, to enablepoor people to participate in and bene t from development, and to shapethe market economy, so that it behaves in an inclusive and sustainablemanner.

This paper makes the case for inclusive and sustainable developmentand suggests key steps for governments in the region to promoteit. It builds on existing policies and initiatives and identi es concreterecommendations that can help Asian countries address poverty and

inequality.

At the heart of the matter is whether key issues of human rights, genderequality and the sustainable use of natural resources are championedby governments. With increasing awareness of the state responsibility toprotect human rights, several states and institutions are exploring actionplans on business and human rights, which provide a ray of hope thatthe worst kinds of abuses of human rights by business can be averted.Meanwhile gender inequality remains a key barrier for economic andsocial development across the region, as women are over-representedin precarious and low-wage jobs and under-represented in economicand political decision making. Rectifying such mistakes will both bringgreater prosperity and create fairer societies.

Powerlessness drives poverty. When men and women workers, farmers,community members and citizens have little power over the commercialand political decisions that shape their lives, ISD cannot happen. It is forthis reason that empowering people living in poverty, both in the politicaland economic spheres, should be an explicit focus of policy makers.

Small business, particularly in agriculture, can be a key driver for buildinginclusive economies. Small business generates jobs. Support for smallbusinesses, particularly by eradicating the “missing middle” – smallenterprises – particularly in agriculture that miss out on access to nance,

Inclusive and sustainabledevelopment (ISD) is possible,if driven by an economyand society that prioritizesopportunities for those leftbehind; one that addressesgender discrimination andsocial exclusion, and aimsfor a fairer economy, not justa larger one.


3/28

2

will allow a more diverse and inclusive economy to form. As today’s smallbusinesses are tomorrow’s large businesses, supporting small enterprisemodels that prioritize inclusion and are set up to spread bene tsmost widely and fairly is key to shaping the future of the economy.Supporting enterprise models, such as social enterprises, cooperatives,

and employee-owned businesses, will create a more inclusive andfairer economy. Agriculture remains a major employer in the region,providing between 30 and 60 percent of jobs and driving food security.Efforts to support small-scale farmers, particularly by encouraging andstrengthening farmer-owned enterprises, are key enablers of ISD.

Health and education are the bedrocks of healthy, productive andprosperous societies. For ISD to happen, governments must investheavily in these essential services, by implementing policies andprograms that support people living in poverty. To facilitate this process,fair taxation is key to ensuring that corporations and the rich are payinga greater share, which governments can then use to support health andeducation services for everyone, especially the poor. Focusing on thedirect taxation of wealth, pro ts, and high incomes should be preferred toconsumption taxes.

Meanwhile, all efforts to promote inclusive growth are undermined if weuse up the earth’s resources and fail to curb climate change, making itimpossible for future generations to live happy and healthy lives. We alldepend on the natural resources, be it water, air, forests, soil, or energy,and we must balance the use of these to sustain present economic

and other human activities to create jobs, food, fuel, and the like, withthe imperative to respect the limits of the earth’s resources. Addressingclimate change by reducing greenhouse gas emissions, following a low-carbon development path, and helping communities, especially the mostvulnerable, to adapt to its effects are essential to inclusive sustainabledevelopment.

Inclusive and sustainable development entails living in the spacebetween a social oor of the essential requirements for people to livea digni ed life, and a planetary boundary of the earth’s sustainablenatural resources. As Asia comes to represent the lion’s share of global

economic activity, its ability to live within these boundaries will determinethe sustainability of our planet.

To summarize, the challenge for governments is to promote ISD through:

• Empowering women

Reforms that target women’s empowerment can transformsociety and the economy. Governments can push for equal jobopportunities and implement equal living wages between men andwomen; recognize and strengthen women’s right to own land; andencourage women’s participation and leadership in local and nationalorganizations and government, among others.


4/28

3

• Empowering communities and workers in markets and politics

Empowered people are in a better position to contribute to andbene t from economic growth. Their participation in decision makingcan help ensure that government policies are truly responsive to the

needs of the poor, and are effective in addressing the main drivers ofpoverty. Their voice in corporate structures and processes can helppromote sustainable business operations and supply chains.

• Protecting and promoting human rights

Human rights are at the heart of the dignity of people. They comprisethe foundation of equality because they operate on the principlethat all people are equal and should enjoy the same basic rights,regardless of gender, age, religion, race, and socio-economic status.In the economic realm, the UN Guiding Principles on Businessand Human Rights is important to ensure that states protect andbusinesses respect human rights, and that remedies are madeavailable to individuals and communities whose rights have beenviolated.

• Promoting inclusive and sustainable agriculture

Experience has shown that economic growth models thatfocus solely on increased production are not enough to lift ruralcommunities out of poverty. Inclusive and sustainable agricultural

models that put small-scale producers, both men and women,at the center are the key to achieving inclusive and sustainabledevelopment.

• Supporting small business, but shaping them, too

Supporting micro- and small and medium enterprises (MSMEs) canhelp make economic growth and development more inclusive, asit opens up opportunities for people to participate in the economy.While regulating to shape the behaviour of existing large companiesis also key (ensuring they respect human rights and do not misuse

their market power), MSMEs offer a unique opportunity to shape thefuture of the business world.

• Investing heavily in education and health

Investing in and increasing people’s access to essential educationand health services are crucial measures in promoting a healthy andinformed population that is able to participate in and contribute toeconomic growth, and live with dignity.


5/28

4

• Respecting planetary and social boundaries

All policies should ensure that the country is not using morenatural resources than what is sustainable or damaging the naturalenvironment, such that future generations are deprived of the same

opportunities to live inclusively and sustainably.

• Promoting scal justice

Fiscal justice is one of the best strategies to address inequality. It canhelp redistribute wealth by taxing the rich and using tax revenues tosupport programs that will empower the poor. It can also be used toin uence the way companies operate and behave.

Overall, Asia is up to the challenge of generating inclusive andsustainable development. However, it requires clarity of vision anddetermination from policy makers on these eight points. It is possible,and the region’s people depend upon it.


6/28

5

1 INTRODUCTION:INEQUALITY IN ASIA

Ka Eva, a woman farmer leader from a small town in Rizal in thePhilippines stares helplessly at the huge pile of mangoes slowly rottingunder the blazing sun. The cost of transporting her mangoes to themarket is higher than what she expects to gain from selling them. Tenyears ago, she and other farmers in their barangay planted mangotrees with high hopes. They were encouraged by the promise of biggermarkets for one of the country’s top agricultural exports, as the countrysigned free trade agreements with its neighbors in the Association ofSoutheast Asian Nations (ASEAN ) and other countries. However, badroads, high transport costs, and the lack of storage and processingfacilities and technology prevent her and other farmers from bene ttingfrom their harvest. In 2010, world imports of mango were valued at$1.5bn. 1 However, this provides little comfort to Ka Eva, who cannot nda way to connect to the local market, let alone to international buyers.

In another part of Asia, El Yin, a female worker in Myanmar, sighs as sheanticipates the long day ahead. Like most workers in the factory, she hasto work 3 to 10 hours overtime every week. El Yin earns a base salary of$1.50 a day, or a total of $40 a month. With overtime pay and bene ts,she is able to bring home an average of $3.70 a day, or about $98 permonth. Half of her base pay is spent on accommodation, while the

rest of her salary is used to support her family. El Yin is not paid all herovertime wages. She usually receives overtime pay for only two or threehours. She is worried about the impact of the long hours on her health.She is afraid to voice her concerns, because the company might dismissher. El Yin is one of 300,000 women in Myanmar’s rapidly growinggarments industry. 2

Ka Eva and El Yin are only two of the multitudes of people left behindby Asia’s much vaunted economic growth. Their stories re ect the sadphenomenon of poverty amidst plenty, of people left on the sidelinesof Asia’s march to progress. Their stories cast a dark shadow on theregion’s impressive economic performance. Between 1990 and 2010, Asia’s economic output increased at aremarkable annual average of 7 percent per year, while the rest ofthe world’s economy slowed down. 3 In 2013, the developing region’seconomic output expanded by 7 percent. 4 However, this impressiveeconomic performance is taking place alongside high levels of povertyand rising inequality. Inequality in the region between the mid-1990sto the late 2000s has risen by as much as 18 percent, much highercompared with the 10 percent increase in the Gini coef cient of OECDcountries. Although the last two decades saw 650 million people in theregion lifted out of poverty, 1.6 billion people continue to live on less than$2 a day. 5


7/28

6

Rising inequality means the gap between the rich and the poor isgrowing wider and deeper. It means the bene ts of economic growth areconcentrated towards those with wealth and enjoying higher incomes.It indicates a fundamental unfairness in our economies and reveals thatthe region’s growth is not pulling people out of poverty at the same rate

as the richest individuals accumulate wealth.

The challenge of inclusion and sustainability

Most people agree that rising inequality is a problem. There is a hugebody of research and evidence showing why economic growth is notenough to address inequality and poverty. 6 Institutions that typically puta premium on economic growth, such as the Asian Development Bank(ADB), the World Bank, and the International Monetary Fund (IMF), haveacknowledged the importance of making growth inclusive. The UnitedNations Development Program (UNDP) describes inclusive growthas one where poor people are able to participate in and bene t fromeconomic progress. 7

However, in Asia, addressing inequality and multi-generational povertyis not only about promoting economic inclusion. The growing dividebetween the rich and the poor presents only one dimension of inequalityin the region. Horizontal inequalities – that is, inequalities betweendifferent groups of people based on gender, race, ethnicity, geographicallocation or age – sustain and are sustained by the economic inequalitycharacterizing the region. Marginalized groups face entrenched barriers

to escaping poverty. Discrimination, limited economic opportunities, andexclusion from political processes work together to trap poor peopleat the bottom of the economic ladder for generations. Asia’s growth isunlikely to bene t the poorest while such systematic exclusion persists.

Additionally, it is impossible to provide long-lasting solutions to inequalityand poverty without maintaining the principle of sustainability. Economicmodels that focus solely on growth without regard for the need to protectthe environment and natural resources are akin to killing the proverbialgoose that laid golden eggs. In Asia, we see grim reminders of the folly ofpursuing economic growth above all else: from murky and heavily pollutedrivers water to the thick and toxic air in rapidly developing cities and towns.

The devastating impact of climate change in the region, especially onpoor and vulnerable communities, underscores the need for Asia tohelp nd national, regional, as well as global solutions to this problem.

At the national level, this involves the pursuit by Asian governmentsof a development path that reduces greenhouse gas emissions andintegrates climate adaptation and disaster risk reduction in nationalplanning processes.

Sustainability means current resources are nurtured and notundermined, so that they can continue to provide food, water, healthcare,energy, and livelihoods for present and future generations.

Rising inequality means thegap between the rich and thepoor is growing wider anddeeper. It means the bene tsof economic growth are

concentrated towards thosewith wealth and enjoyinghigher incomes.

Horizontal inequalities – that is,inequalities between differentgroups of people basedon gender, race, ethnicity,geographical location or age – sustain and are sus-tainedby the economic inequality

characterizing the region.


8/28

7

Inclusive and sustainabledevelopment (ISD) is onewhere everyone is ableto meet essential needsand enjoy basic rights and

freedoms, while respectingthe limits of earth’s resources.

Inclusive and sustainable development –living within the doughnut

Inclusive and sustainable development (ISD) is one where everyone isable to meet essential needs and enjoy basic rights and freedoms, whilerespecting the limits of earth’s resources. Living ‘within the doughnut’(see Figure 1), is described by Kate Raworth (2012) in an OxfamDiscussion Paper. The outer circle represents planetary boundaries(beyond which we run the risk of undermining the earth’s naturalresources, systems and processes), while the inner circle representsthe social boundaries – the essential requirements for people to live adigni ed life. 8 The space between these two circles, or what is referredto as the area within the doughnut, is where inclusive and sustainabledevelopment happens.

Figure 1: Living within the Doughnut, K. Raworth (2012)


9/28

8

For Ka Eva and the farmers in Rizal, inclusive and sustainabledevelopment means being given the necessary government supportnot only to improve production, but also to build farmers’ enterprisesthat will enable them to add value to their products, connect to markets,and increase their incomes. It entails using farming technologies

that promote the sustainable use of land and water, and do not posehazards to people’s health and to the environment. It involves beingconsulted and having the opportunity to participate and take leadershipin the development of policies and programs that will affect their future.Essentially, it means that small-scale farmers have greater power inmarkets and politics, so they can control their destiny and get their fairshare of pro ts.

For El-Yin, inclusive and sustainable development is securing fairwages and having greater security in employment. It means working ina safe environment, where women’s contributions are acknowledged,respected, and fairly valued equally with those of men. It necessitatesbeing part of a supply chain that produces safe food in a way thatsupports communities, cares for the environment, and does notexacerbate climate change.


10/28

9

2 DRIVERS OF INCLUSIVE AND SUSTAINABLE

DEVELOPMENTOxfam believes that inequality in Asia can be addressed by promotingpeople’s empowerment, ensuring equitable access to land and otherproductive resources, providing fair access to essential services likehealth and education, and applying fair taxation and implementingfair living wages. These measures also serve as the basis of inclusivesustainable development.

Development is a complicated struggle, and the experience of nationsvaries as they progress along the path to development. However,some key principles have emerged that pave the way for inclusive andsustainable development. If governments want to pursue ISD, they mustfocus on these principles.

a. Rights

Human rights are at the heart of people’s dignity. They constitute thefoundation of equality because they operate on the principle that allpeople should enjoy the same basic rights, regardless of gender, age,religion, race, and socio-economic status.

Respecting, upholding, and protecting basic human rights and therights of communities, especially those that are marginalized anddisplaced – be it as a result of large-scale business operations,development projects, or con ict – are a prerequisite for tacklingpoverty and attaining ISD. These rights include land and waterrights – which, for small-scale producers (who represent some ofthe poorest people in the region), are intricately linked to the rightto food 9, labor rights 10 , and the right of workers to be free fromdiscrimination. 11 States have a duty to protect human rights and toregulate the private sector, which itself must respect human rightsin its activities. The UN Guiding principles on Business and HumanRights puts forward the ‘protect-respect- remedy’ framework, statingclearly that business and government alike have clear obligations onthe human rights agenda. 12

b. Gender equality

Women across Asia continue to face discrimination in the workplace,market, community, politics, and even at home. In the Philippines andIndonesia, the gender wage gap in 2008, in terms of hourly earnings,stands at 17 percent and 14 percent, respectively. 13 Although womenmake up half of the agricultural labor force in Asia, only 62 percent of

Development is a complicatedstruggle, and the experienceof nations varies as theyprogress along the path todevelopment.


11/28

10

them are paid for their work in this sector. 14 In comparison with theirmale counterparts, women have unequal access to basic services(including education and health) and productive assets (including land,credit, agricultural extension, training, and inputs). Only 12 percent of3 million landowners in the region are women, while the remaining 88

percent are men.15

Women remain under-represented in producers’ organizations, 16 as well as in the broader economy and society. 17 For instance, theshare of seats of held by women in parliaments, though increasing,is still limited. In South Asia, women hold 18 percent of total seatsin parliament. This gure is slightly higher in Southeast Asia,where women hold 20 percent of parliamentary seats. 18 Addressingdiscrimination means responding to the economic, social, and culturalfactors that work together to perpetuate gender inequality. It entailsgiving women access to opportunities and productive resources.It means enjoining governments, civil society groups, and otherinstitutions to take an active role in shaping cultural norms and values,so that these do not discriminate against women, and respect, upholdand protect women’s rights instead.

Debora is a Member of the Palmyrah society and she lives in Naruvlakulam village, in Sri Lanka,with her husband and son. ‘I nd the weaving helps me forget my dif culties, sorrows and grievances.There are always several women here and we get together and chat about things that are worryingus. That’s a big added bene t to this work.’ In 2013, Oxfam worked closely with communities in thenorth and eastern provinces who were worst affected by the con ict. The plan was to help re-buildthe communities capacity, re-establishing agricultural production and empowering women, enablingthem to improve their status and earning potential. Credit: Bes Young


12/28

11

Powerlessness is at theheart of poverty.

At the same time, addressing gender discrimination requiresaddressing gender-biased policies that affect women’s roles andstatus across different social and cultural backgrounds. For example,family law affects the distribution of power and resources within thehousehold, and often discriminates against women by recognizing

only men as heads of households. This affects women’s ability toaccess credit or participate in contract farming. Inheritance lawoften restricts women’s ability to inherit land. Measures to addressthe entrenched discrimination faced by women are critical to ISD.Development cannot be inclusive if half of humanity is systematicallydiscriminated against.

c. Poor people holding power in marketsand politics

ISD recognises that powerlessness is at the heart of poverty. Thismeans economic development is inclusive only when people inpoverty obtain power to control their destiny. 19 Marginalized workersand communities are often excluded from policy making that affectstheir welfare, and are unable to hold decision makers accountable.They are vulnerable to exploitative practices in the market throughabusive employers and reckless investors. Workers on temporarycontracts 20 , migrant laborers 21 with little voice or power, andcommunities facing land rights violations 22 are scenarios that are alltoo common across Asian countries.

Public policy and market interventions that are made withoutconsidering these dynamics can amplify poverty and otherinterconnected forms of inequality, leading to social structures andpractices that favor men over women, employers over workers, andcorporate investors over communities. 23 Reversing this powerlessnessmeans strengthening the voice and participation of workers andcommunities, particular women, in policy making and inclusivemarkets, while stopping abuses of power by the powerful. It alsomeans ensuring that people have equal access to educationalopportunities and health services that will give them greater power andleverage in the economy, as well as in politics. It means supportingand encouraging women, farmers, workers, peoples and communitiesto unite, organize themselves, and work together in order to build theirpower to shape policies and programs that affect them. 24


13/28


14/28

13

Promoting inclusive and sustainable agricultural development entailsensuring that farmers and their enterprises have access to productiveresources, such as land, water, nancial services, and other inputs thatwill give them greater power in markets. 29 Many producers’ associationsand other forms of small enterprises in agriculture, which are critical

for connecting farmers to markets, are not able to access formalnancial services.This problem is particularly acute in the sector wherethe ‘missing middle’ has developed. The unmet needs for nance ofproducer associations and other forms of MSMEs in agriculture, fortransactions between £5,000 and £500,000, constitute this ‘missingmiddle’ in nance. 30 This, combined with the nancing gap that is alsopresent in the rural economy more broadly, exacerbates the challengesrelating to access to nance among rural MSMEs.

e. Fairer and better companies through

shaping MSMEsMicro-, small, and medium enterprises (MSMEs) comprise a categorythat is critical to economic development. 31 They are the engine forentrepreneurship and the backbone of economies. MSMEs themselvescan be diverse, differing in structure, values, and impacts on peopleand the planet. Through carefully selected policies, governments canhelp shape an MSME sector that contributes positively to society andrespects the environment. This can be the key to ISD. While manyMSMEs remain small, tomorrow’s corporate giants are today’s MSMEs.

A new breed of enterprises, known as social enterprises, are emergingthroughout Asia, and are known for their ability to tackle social issueswhile generating livelihoods and creating wealth in communities thatare too often left behind. Globally and in the region, there are severalinitiatives that are looking to support such enterprises, includingthe Poverty Reduction Through Social Entrepreneurship Act in thePhilippines. 32 The structures and cultures of business emerging throughthe MSME sector will shape the future of our global economy. Thecorporate models that are prominent today have themselves evolved outof government policies and regulations. A new generation of corporatemodels, which would ideally be more supportive of ISD, can be promotedthrough targeted MSME policies.

Many producers’ associationsand other forms of smallenterprises in agriculture,which are critical forconnecting farmers to

markets, are not able toaccess formal nancialservices.

MSMEs are the engine forentrepreneurship and thebackbone of economies.


15/28

14

Box 1: Seeds o f hope in Nepal

There are many ways to address inequality and promote inclusiveand sustainable development in Asia. Oxfam’s work in Nepal showshow helping women farmers gain access to productive resources,strengthen enterprises, and establish links with buyers can helpimprove their quality of life, and give them greater power in theirhomes and in the market.

Kalpana is one of the 1,200 women members of the Pabitracooperative in Surkheat, Nepal. Members of this enterprise produceand sell seeds to the market. Pabitra partnered with Oxfam toimprove seed production and marketing. Farmers were given trainingon seed production and leadership development. As part of theprogram with Oxfam, they linked up with the Kumari Bank, whichdesigned a credit program that complemented their production andmarketing schedule, as well as cash ow.

Cooperative members also entered into a mentorship agreementwith the Federation of Nepalese Chambers of Commerce andIndustry. Members were given training on business planning,

nancial management, market pricing, and policy-related issues.Equally important was the ability of the cooperative to establishlinks with buyers, who committed to purchase their products at aguaranteed price. Because of these interventions, the enterprise wasable to increase its production from a few hundred kilos to 36 tonsper season. Pabitra members like Kalpana were able to expand theirvegetable seed output from 2 to 5 kilograms to 100 kilograms.

Kalpana re ects on the changes in her life: ‘From this business, I amable to run my household and pay for my children’s food, education,and other expenses. In the same way that an educated person gains

con dence to get jobs and help build their country, I have con dencethat I will be able to do the same in agriculture. This is my dream.’


16/28

15

f. Access to essential services

People who are healthy are generally more productive and in a betterposition to generate income. In the same way, people who have accessto demand-responsive education and skills training have greater leverage

in labor markets. Investments in essential services, particularly educationand health, offer huge potential to promote inclusion because they help toincrease poor people’s capacity to participate in, contribute to, and bene tfrom economic progress. Unfortunately, Asia still has a long way to go toimprove health and education services. In 2006, Southeast Asia chartedthe lowest spending on health services as a percentage of GDP at 3percent – less than half of the global average of 9 percent. 33 Governmentspending on education is also fairly limited. In Cambodia, Laos PDR,Myanmar, the Philippines, Bangladesh, Pakistan, and Sri Lanka, publicexpenditure as a percentage of GDP was less than 3 percent duringthe period 2000 to 2012, 34 compared with the OECD average of 5percent of the GDP in 2011. 35 The average duration of schooling inSouth and Southeast Asia is approximately 6 years, compared with theworld and OECD average of 9 years and 11 years, respectively. 36 In

Asia, differences in human capital and skill endowment – factors largelyin uenced by people’s access to education – account for 20 percent to 40percent of total inequality. 37 Addressing inequality and promoting inclusiveand sustainable development requires suf cient public investment andeffective delivery of education and health programs, especially for peopleliving in poverty. It is essential that these services are not left only to theprivate sector, and are made accessible to the poor.

g. Environmental sustainability

Forest cleared by a palm oil companyin Indonesia. Biofuels are seen asa way to combat climate changeand provide an alternative sourceof fuel in the face of decreasingglobal oil reserves. However, oilpalm plantations used for productionof biodiesel are a major driverof deforestation in tropical Asia.Deforestation increases Indonesia’svulnerability to the impact of sealevel rises, prolonged drought and

heavy rainfall leading to oods andtidal surges. Credit: Tom Greenwood/Oxfam GB

Investments in essentialservices, particularlyeducation and health, offerhuge potential to promoteinclusion because they help

to increase poor people’scapacity to participate in,contribute to, and bene tfrom economic progress.


17/28


18/28

17

How governments spend their revenue can determine whether peopleescape poverty. Public expenditure that does not prioritize pro-poorprogrammes will undermine poverty reduction. Evidence from aroundthe world indicates that government spending has signi cant impactson income distribution, depending on 45 the composition of expenditure,

peoples’ participation, the nature of government programmes, and theeffectiveness of delivery.

Government policies that rely heavily on consumption taxes enabletax avoidance by rich individuals and corporations, foster low publicexpenditures on essential services, and neglect social protection and criticalinfrastructure. Such trends will not lead to ISD and fairer societies in Asia.

Fiscal justice is not only about income redistribution. It is also aboutusing taxes to in uence the way people and companies behave, sothat they are able to contribute to the common good. For instance,applying progressive environmental tax, as well as taxes on greenhousegas emissions and carbon pricing schemes, can help to promote the

judicious use of land and water resources and help to address climatechange, while generating resources to support programs for the poor.

Box 2: Tax holidays

Despite various studies indicating that tax holidays do not result toa substantial increase in foreign direct investment, countries in Asiacontinue to engage in an all-out battle to offer the best tax incentives

to corporations. Taxes in 6 member countries of the Association ofSoutheast Asian Nations have gone down over the period 2006 to2015, in keeping with ASEAN’s goal of attracting more investorsinto the region. 46 Asia, with its 44 countries, already has the lowestaverage top marginal corporate tax in the world at 21 percent; lowerthan the world average of 23 percent. 47

Lower tax revenues mean less funds to meet the development needsof Asia’s population, especially the 700 million who presently live onless than $2 a day. It means less money for government to spendon health and education and to help build communities’ climateresilience. It means not having enough funds to provide farmers,producers and small and medium enterprises with essential supportservices to improve production and increase incomes. Accordingto Prakarsa Indonesia, if the estimated revenue loss of 0.5 percentin developing countries was used in Indonesia, it would translate toforegone revenues equivalent to more than IDR 50 trillion ($350m),enough to provide one million subsidized houses for the poor. 48

However, corporate tax cuts are only one way through which bigcompanies are able to evade tax responsibilities. In Bangladesh,weak transfer pricing monitoring mechanisms allowed multinationalcompanies to pay taxes equivalent to $310m a year. 49 This money

could have been enough to provide one- fth of the budget forprimary education in the country.


19/28

18

3 RECOMMENDATIONSInclusive and sustainable development in Asia is both necessary andpossible. The challenge for governments is to promote it through the

following:

1. Empower women

Governments can play a key role in empowering women and girls.From the political to the economic system, from the healthcare to theeducation sector, and across society, reforms that target women’sempowerment can transform society and the economy. These reformsbegin with recognizing women’s roles in economic development, be it asfarmers, shers, workers, or entrepreneurs.

Five key policies, if implemented can go a long way in promoting genderequality across the region:

• Create equal job opportunities and implement equal living wagesbetween men and women;

• Recognize and strengthen women’s right to own land;• Develop credit programs that are designed speci cally for women

and target them as bene ciaries;• Allocate a budget in the spending programs of local and national

governments, that speci cally targets women’s empowerment; and

• Encourage women’s participation and leadership in local andnational organizations and government.

2. Empower communities and workers inmarkets and politics

Empowered people are in a better position to contribute to and bene tfrom economic growth. Their participation in decision making canhelp to ensure that government policies are truly responsive to theneeds of the poor, and are effective in addressing the main drivers and

enablers of poverty. Their voice in corporate structures and processescan help promote sustainable business operations and supplychains. Empowering poor people is an important part of inclusive andsustainable development. The implementation of the following measurescan help increase poor peoples’ power in markets and politics:

• Create mechanisms through which people’s organizations andcivil society groups can participate in government decision-makingprocesses;

• Strengthen policies that uphold workers’ freedom of association andincrease their bargaining power within companies and industries;

• Set and enforce a fair living wage as the minimum wage in order toenable workers to live with dignity; and


20/28

19

• Adopt and implement policies that uphold communities’ right todecide over projects and investments that will affect them.

3. Protect and promote human rights

Human rights are at the heart of dignity. These are the foundation ofequality, because they operate based on the principle that all peopleare equal and should enjoy the same basic rights, regardless of gender,age, religion, race, and socio-economic status. In the economic realm,the UN Guiding Principles on Business and Human Rights is importantto ensure that states protect and businesses respect human rights,and that remedies are made available to individuals and communitieswhose rights have been violated. 50 The application of these principlesis especially important in Asia, where the rapid in ux of private sectorinvestments is changing rural and urban landscapes, and affecting entirecommunities. Governments can help safeguards the human rights oftheir constituents through these interventions:

• Develop and implement national and regional action plans tooperationalize the UN Guiding Principles on Business and HumanRights, in close consultation with peoples’ organizations, civil society,businesses, and other stakeholders; and

• Strengthen regional coordination in providing redress to communitiesnegatively affected by the operations of private sector investments,especially those involving cross country investments.

4. Inclusive and sustainable agricultural marketsMillions of poor people in Asia depend on agriculture for their foodand livelihood. Interventions in the sector offer the most potential inaddressing poverty, food insecurity and inequality. Increasingly, thefarmers producing our food are capturing less and less of the revenuesin the sector, but increasingly carrying and absorbing the risks. Withoutaddressing fairness and power issues in agriculture, ISD will not bepossible. Experience has shown that economic growth models that focussolely on increased production are not enough to lift rural communitiesout of poverty. Inclusive and sustainable agricultural models that putsmall-scale producers, both men and women, at the center is thekey to achieving ISD. 51 Governments, working closely with peoples’organizations, civil society groups, the private sector, and other relevantinstitutions, can take the lead in adopting and implementing the followingpolicies to promote inclusive and sustainable agriculture:

• Provide policy and program support for the development farmers’enterprises, cooperatives, and other similar institutions, allowingfarmers to add value and capture greater revenues from supplychains;

• Adopt and implement policies that require companies to buildsustainable value chains such as by mandating companies to pay


21/28

20

for insurance as a way of mitigating risks due to climate change,adopt fair living wages, provide clear and transparent employmentcontracts for farm workers, adhere to strict environmental standards,and provide support and pay prices that allow for sustainableagricultural production (including living incomes for farmers and

labourers), among others; and• Strengthen land rights, especially those of women farmers, andimprove small-scale producers’ access to other productive resourcesand services, such as credit, technology, links to markets, and thelike.

5. Support MSMEs, but shape them too

Supporting micro- and small and medium enterprises (MSMEs) can helpmake economic growth and development more inclusive, as it opens upopportunities for people to participate in the economy. While regulatingto shape the behaviour of existing large companies is also key (ensuringthey respect human rights and do not misuse their market power),MSMEs offer a unique opportunity to shape the future of the businessworld. However, supporting MSMEs is not enough, and policy makersmust actively support the forms of MSMEs that will be most conduciveto ISD. These could include cooperatives, employee ownership, socialenterprises, Bene t Corporations, and other corporate forms thatpromote better social and environmental outcomes.

Below are some of the interventions that governments can adopt and

implement to support enterprises:

• Increase the access of MSMEs to nance 52 by encouraging andundertaking initiatives to provide them with seed and venture capital,fair and inclusive lending terms and effective credit guaranteeschemes;

• Help MSMEs access technology for value addition and facilitatetheir links to markets, especially during the early stages of theiroperations;

• Work with MSMEs in developing competition policies aimed atensuring that markets are not dominated by big players; and

• Protect (through regulation) and promote (through access togovernment services) MSMEs that prioritize social outcomesalongside commercial ones, including social enterprises

6. Invest heavily in education and health andensure that these are accessible to all,especially poor people

Studies indicate that government expenditures on health and educationnot only help productivity and economic development, but also helpreduce income inequality in Asia and the rest of the world. 53 Investing inand increasing people’s access to these essential services are crucial


22/28

21

steps to promoting a healthy and educated population, able to participatein and contribute to economic growth, and live with dignity.

By increasing the budget allocation for health and education,governments across the region can support the implementation of the

following policies: On education:

• Build more classrooms and schools, especially in remote rural areas,and create the necessary infrastructure to make these accessible tostudents;

• Increase teachers’ salaries and improve teacher education;• Develop economic and social incentive programs to increase school

attendance; and• Strengthen and broaden access to vocational and skills training

programs.

On health:

• Increase people’s access to medicine, vaccines, and medicalservices;

• Promote universal access to free healthcare; and• Improve women’s access to reproductive healthcare

7. Live within planetary boundarieswhile ensuring that people’s essentialrequirements to live with dignity are met

All policies should ensure that the country is not using more naturalresources than is sustainable, or damaging the natural environment,such that future generations would be deprived of the same opportunitiesto live inclusively and sustainably. 54 Government can adopt the followingmeasures to ensure that development interventions, whether bybusiness, government agencies, and other institutions, do not underminethe environment:

• Develop and enforce stricter environmental standards on wastetreatment, carbon emissions, deforestation and land and land useconversions, while working in close consultation and coordinationwith communities;

• Explore market-based mechanisms to ensure that companies arepaying the full environmental and inter-generational cost of theiroperations; and

• Help address climate change by adopting policies that promoterenewable energy, reduce and, with the support of the internationalcommunity, eventually phase out greenhouse gas emissions as partof a comprehensive low carbon development plan.


23/28

22

8. Promote scal justice

Fiscal justice is one of the best strategies to address inequality. It canhelp redistribute wealth by taxing the rich and using tax revenues tosupport programs that will empower the poor. It can also be used to

in uence the way companies operate and behave. Unfortunately, currenttax structures in many countries put much of the tax burden on the poor.Governments can help promote scal justice by adopting a pro-poor

scal reform agenda that incorporates the following measures:

• Increase the share of direct taxes vis-a-vis indirect taxes, so that thepoor do not end up shouldering the cost of public spending;

• Eradicate loopholes that allow big corporations to unfairly reducetheir tax burden – a process that will require policies that abolish taxbreaks and incentives for investors, and discourage transfer pricing,among others;

• Develop a uniform corporate tax policy with harmonized tax rates onglobal and regional capital – a measure that will reduce incentives forcorporations to move from countries with higher tax rates to thosewith lower ones – and work with other governments to reform theglobal tax system to help ensure that corporations pay their dues.

• Use tax revenues to support programs that expand poor people’saccess to essential services, such as healthcare and education, andto productive resources, such as land and water rights, productioncapital, technology, and other support services.

• Apply environmental taxes to promote the judicious use of natural

resources, implement carbon pricing schemes to reduce greenhousegas emissions, and use the proceeds from these taxes and schemesto support programs that will help build economic and climateresilience.


24/28

23

NOTES1 International Trade Centre. (2011). Export fact sheet ECOWAS: Mangoes. Retrieved from

http://www.intracen.org/uploadedFiles/intracenorg/Content/About_ITC/Where_are_we_working/Multi-country_programmes/Pact_II/111129-Export-Factsheet-Mangoes.pdf

2 Oxfam International. (2009). In work but trapped in poverty. Retrieved from https://www.oxfam.org/sites/www.oxfam.org/ les/ le_attachments/ib-in-work-trapped-poverty-290915-en.pdf

3 Asian Development Bank. (2012). Asian Development Outlook 2012: Confronting risinginequality in Asia. Retrieved from http://www.adb.org/publications/asian-development-outlook-2012-confronting-rising-inequality-asia

4 Asian Development Bank. (2014). Asian Development Outlook 2014: Fiscal policy for inclusivegrowth. Retrieved from http://www.adb.org/publications/asian-development-outlook-2014-

scal-policy-inclusive-growth

5 Asian Development Bank. (2014). ADB’s support for inclusive growth: Thematic evaluationstudy. Retrieved from http://www.adb.org/documents/adbs-support-inclusive-growth

6 Asian Development Bank. (2014). ADB’s support for inclusive growth: Thematic evaluationstudy. Retrieved from http://www.adb.org/documents/adbs-support-inclusive-growth

7 Ranieri, R., & Ramos, R.A. (2013). Inclusive growth: Building up a concept. Retrieved fromUnited Nations Development Program International Policy Center for Inclusive Growthwebsite: http://www.ipc-undp.org/pub/IPCWorkingPaper104.pdf

8 Raworth, K. (2012). A safe and just space for humanity: Can we live within the doughnut?. Retrieved from Oxfam International website: https://www.oxfam.org/sites/www.oxfam.org/

les/dp-a-safe-and-just-space-for-humanity-130212-en.pdf

9 Sahan, E. (2013). Power, rights, and inclusive markets. Retrieved from Oxfam Internationalwebsite: https://www.oxfam.org/sites/www.oxfam.org/ les/bn-power-rights-inclusive-markets-agriculture-050613-en_1.pdf

10 Wilshaw, R. (2010). Better jobs in better supply chains. Retrieved from Oxfam Internationalwebsite: https://www.oxfam.org/sites/www.oxfam.org/ les/b4b-better-jobs-better-supply-chains.pdf

11 Wilshaw, R. (2010). Better jobs in better supply chains. Retrieved from Oxfam Internationalwebsite: https://www.oxfam.org/sites/www.oxfam.org/ les/b4b-better-jobs-better-supply-chains.pdf

12 Oxfam International. (2013). Business and human rights. Retrieved from https://www.oxfam.org/sites/www.oxfam.org/ les/tb-business-human-rights-oxfam-perspective-un-guiding-principles-130613-en.pdf

13 Fennel, S. (2015), ‘Deconstructing Inequality: Towards a Fairer Asia’, Oxfam, 2015 [Internaldocument, Oxford, United Kingdom, Oxfam International]

14 Food and Agriculture Organization of the United Nations. (2015). Retrieved from http://www.fao.org/gender/gender-home/en/?no_cache=1

15 Food and Agriculture Organization of the United Nations. (2015). Retrieved from http://www.fao.org/gender/gender- home/en/?no_cache=1

16 Penunia, E. (2011). The role of farmers’ organizations in empowering and promoting theleadership of women [PDF document]. Retrieved from http://www.un.org/womenwatch/daw/

csw/csw56/egm/Penunia-presentation-UN-Women.pdf17 Oxfam International. (2012). Gender equality: It’s your business. Retrieved from https://www.

oxfam.org/sites/www.oxfam.org/ les/ le_attachments/bfb07-gender-equality-its-your-business-060312-en_3.pdf


19 Green, D. (2012). From poverty to power: How active citizens and effective states can changethe world. Great Britain, U.K.: Oxfam International and Practical Action Publishing.

20 Wilshaw, R. (2013). Labour rights in Unilever’s supply chain: From compliance to goodpractice. Retrieved from Oxfam International website: https://www.oxfam.org/sites/www.oxfam.org/ les/ le_attachments/rr-unilever-supply-chain-labor-rights-vietnam-310113-en_0.pdf

21 Wilshaw, R. (2013). Labour rights in Unilever’s supply chain: From compliance to goodpractice. Retrieved from Oxfam International website: https://www.oxfam.org/sites/www.oxfam.org/ les/ le_attachments/rr-unilever-supply-chain-labor-rights-vietnam-310113-en_0.pdf


25/28

24

22 Bernabe, M.D. (2012). Better rules for a better future: Regulating private sector agriculture. Retrieved from Oxfam International website: http://policy-practice.oxfam.org.uk/publications/better-rules-for-a-better-future-regulating-private-sector-agriculture-254112

23 Oxfam International. (2013). Business and human rights. Retrieved from https://www.oxfam.org/sites/www.oxfam.org/ les/tb-business-human-rights-oxfam-perspective-un-guiding-principles-130613-en.pdf.

24 Green, D. (2012). From poverty to power: How active citizens and effective states canchange the world. Great Britain, United Kingdom: Oxfam International and Practical ActionPublishing

25 Association of Southeast Asian Nations. (2013). ASEAN statistical yearbook 2012. Retrievedfrom http://www.asean.org/images/2013/resources/statistics/statistical_publication/

ASEANStatisticalYearbook2012.pdf.

26 Wegner, L., & Zwart, G. (2011). Who will feed the world? The production challenge. Retrievedfrom Oxfam International website: https://www.oxfam.org/sites/www.oxfam.org/ les/ le_ attachments/who-will-feed-the-world-rr-260411-en_4.pdf.

27 Sahan, E. (2013). Power, rights, and inclusive markets. Retrieved from Oxfam website: https://www.oxfam.org/sites/www.oxfam.org/ les/bn-power-rights-inclusive-markets-agriculture-050613-en_1.pdf

28 Sahan, E. (2013). Power, rights, and inclusive markets. Retrieved from Oxfam website: https://www.oxfam.org/sites/www.oxfam.org/ les/bn-power-rights-inclusive-markets-agriculture-050613-en_1.pdf

29 Sahan, E. (2013). Power, rights, and inclusive markets. Retrieved from Oxfam website:https://www.oxfam.org/sites/www.oxfam.org/ les/bn-power-rights-inclusive-markets-agriculture-050613-en_1.pdf

30 Doran, A., McFayden, N., & Vogel, R.C. (2009). The missing middle in agricultural fnance:Relieving the capital constraint on smallhold groups and other agricultural SMEs. Retrievedfrom Oxfam International website: http://policy-practice.oxfam.org.uk/publications/the-missing-middle-in-agricultural- nance-relieving-the-capital-constraint-on-112348

31 Catholic Agency for Overseas Development. (2014). What is inclusive growth? Retrievedfrom http://www.cafod.org.uk/content/download/17223/133621/version/1/ le/Inclusive%20Growth%20full%20paper.pdf

32 Dacanay, M.L. (2013, January 20). Understanding social entrepreneurship. PhilippineDaily Inquirer. Retrieved from http://opinion.inquirer.net/45185/understanding-social-entrepreneurship

33 World Health Organization. (2009). World Health Statistics 2009. Retrieved from http://www.who.int/gho/publications/world_health_statistics/EN_WHS09_Full.pdf


35 Organisation for Economic Co-operation and Development. (2014). OECD family database.Retrieved from http://www.oecd.org/els/soc/PF1_2_Public_expenditure_education_Sep2014.pdf



38 Asian Development Bank. (1999). Technical assistance for the regional study on forest policyand institutional reforms. Retrieved from http://www.adb.org/projects/documents/regional-study-forest-policy-and-institutional-reforms-0

39 Gunatilake, H., & De Guzman, F.D. (2008). Market based approaches for managing the Asianenvironment: A review (Report No. 124). Retrieved from Asian Development Bank website:http://www.adb.org/sites/default/ les/publication/28374/economics-wp124.pdf

40 International Fund for Agricultural Development. (2012). Climate change impacts in the Asia/Pacifc region. Retrieved from http://www.ifad.org/events/apr09/impact/paci c.pdf

41 Hijioka, Y., Lin, E., Pereira, J.J., Corlett, R.T., Cui, X., Insarov, G.E., Lasco, R.D., Lindgren,E., & Surjan, A. (2014). Asia. In Barros, V.R., Field, C.B., Dokken, D.J., Mastrandrea, M.D.,Mach, K.J., Bilir, T.E., Chatterjee, M., Ebi, K.L., Estrada, Y.O., Genova, R.C., Girma, B.,Kissel, E.S., Levy, A.N., MacCracken, S., Mastrandrea, P.R., & White, L.L. (Eds.), ClimateChange 2014: Impacts, Adaptation, and Vulnerability (pp. 1327-1370). Cambridge, United

Kingdom: Cambridge University Press.42 Institute on Taxation and Economic Policy (2015). Who pays? Distributional analysis of the tax

system in all 50 states. Retrieved from http://www.itep.org/whopays/full_report.php


26/28

25

43 Martinez-Vazquez, J. (2011). Taxation in Asia. Retrieved from Asian Development Bankwebsite: http://www.adb.org/sites/default/ les/publication/28890/taxation-asia.pdf

44 KPMG Asia Paci c Tax Centre (2013). ASEAN tax guide. Retrieved from http://www.kpmg.com/Global/en/IssuesAndInsights/ArticlesPublications/Documents/asean-tax-guide-v2.pdf

45 Claus, I., Martinez-Vazquez, J., & Vulovic, V. (2013). Coping with rising inequality in Asia: Howeffective are scal policies? Asian Economic Papers 12(3), 1-33. Retrieved from http://www.mitpressjournals.org/doi/pdf/10.1162/ASEP_a_00232

46 Budiantoro, S. (2015). Anticipating tax war in the ASEAN economic integration era.Prakarsa Policy Review 7, 1-4. Retrieved from http://foolsgold.international/wp-content/uploads/2015/09/ASEAN-tax-wars.pdf

47 Pomerleau, K. (2014). Corporate income tax rates around the world. Retrieved from TaxFoundation website: http://taxfoundation.org/article/corporate-income-tax-rates-around-world-2014

48 Budiantoro, S. (2015). Anticipating tax war in the ASEAN economic integration era.Prakarsa Policy Review 7, 1-4. Retrieved from http://foolsgold.international/wp-content/uploads/2015/09/ASEAN-tax-wars.pdf

49 Oxfam International (2014). Business among friends. Retrieved from https://www.oxfam.org/sites/www.oxfam.org/ les/bp185-business-among-friends-corporate-tax-reform-120514-en_0.pdf

50 Oxfam International. (2013). Business and human rights. Retrieved from https://www.oxfam.org/sites/www.oxfam.org/ les/tb-business-human-rights-oxfam-perspective-un-guiding-principles-130613-en.pdf

51 Sahan, E. (2013). Power, rights, and inclusive markets. Retrieved from Oxfam Internationalwebsite: https://www.oxfam.org/sites/www.oxfam.org/ les/bn-power-rights-inclusive-markets-agriculture-050613-en_1.pdf

52 Doran, A., McFayden, N., & Vogel, R.C. (2009). The missing middle in agricultural fnance:Relieving the capital constraint on smallhold groups and other agricultural SMEs. Retrievedfrom Oxfam International website: http://policy-practice.oxfam.org.uk/publications/the-missing-middle-in-agricultural- nance-relieving-the-capital-constraint-on-112348

53 Claus, I, Martinez-Vazquez, J., & Vulovic, V. (2012). Government fscal policies andredistribution in Asian countries (Report No. 310). Retrieved from Asian Development Bankwebsite: http://www.adb.org/publications/government- scal-policies-and-redistribution-asian-countries

54 Raworth, K. (2012). A safe and just space for humanity: Can we live within the doughnut? Retrieved from Oxfam International website: ht tps://www.oxfam.org/sites/www.oxfam.org/

les/dp-a-safe-and-just-space-for-humanity-130212-en.pdf


27/28


28/28

© Oxfam International November 2015

This paper was written by Erinch Sahan and Maria Dolores Bernabe.Oxfam acknowledges the assistance of Maya Maboloc, Ziaul Hoque Mukta,Lilian Mercado, Sita Sumrit, Vu Thi Quynh Hoa, Ghulam Mustafa Talpur,

Anna Coryndon and Kalayaan Pulido-Constantino in its production. It is part ofa series of papers written to inform public debate on development andhumanitarian policy issues.

For further information on the issues raised in this paper, please [email protected].

This publication is copyrighted, but the text may be used free of charge for thepurposes of advocacy, campaigning, education, and research, provided that thesource is acknowledged in full. The copyright holder requests that all such use beregistered with them for impact assessment purposes. For copying in any othercircumstances, or for re-use in other publications, or for translation or adaptation,permission must be secured, and a fee may be charged. [email protected].

The information in this publication is correct at the time of going to press.

Published by Oxfam GB for Oxfam International underISBN 978-1-78077-981-2 in November 2015.Oxfam GB, Oxfam House, John Smith Drive, Cowley, Oxford, OX4 2JY, UK.

OXFAMOxfam is an international confederation of 17 organizations networkedtogether in 94 countries, as part of a global movement for change, to build afuture free from the injustice of poverty:Oxfam America (www.oxfamamerica.org)Oxfam Australia (www.oxfam.org.au)Oxfam-in-Belgium (www.oxfamsol.be)Oxfam Canada (www.oxfam.ca)Oxfam France (www.oxfamfrance.org)Oxfam Germany (www.oxfam.de)Oxfam GB (www.oxfam.org.uk)Oxfam Hong Kong (www.oxfam.org.hk)Oxfam India (www.oxfamindia.org)

Oxfam Intermón (Spain) (www.oxfamintermon.org)Oxfam Ireland (www.oxfamireland.org)Oxfam Italy (www.oxfamitalia.org)Oxfam Japan (www.oxfam.jp)Oxfam Mexico (www.oxfammexico.org)Oxfam New Zealand (www.oxfam.org.nz)Oxfam Novib (Netherlands) (www.oxfamnovib.nl)Oxfam Qué bec (www.oxfam.qc.ca)

Please write to any of the agencies for further information, or visitwww.oxfam.org.