REVIEW
The Asian Development Bank (ADB) commemorated 50 years of its establishment in May 2017. To celebrate the rich history of assistance in development of the region, the Manila-based bank launched a book, “Banking on the Future of Asia and the Pacific: 50 Years of the Asian Development Bank” at its 50th annual meeting of the board of governors in Yokohama. The book tracks back events that led to the idea of a multilateral development bank to serve Asia and the Pacific regions.
The book has been skillfully crafted around these three major areas to illuminate the success story of ADB. Alongside it provides an interesting reading into the growth and development of a region that then had an annual per capita of $100 and the major challenge of the institution was to deliberate around ways to feed a large and growing population.
The book has been authored by pretty much an insider, Peter McCawley, who is an academic from the Australian National University and has worked with the ADB in various capacities for over 25 years. He has also served as a Dean of the ADB Institute.
In pursuit of writing this book he remained closely associated with a dedicated team of ADB staff and benefited from comments and inputs of numerous people, including former ADB presidents and senior officials. The ADB sitting President Takehiko Nakao’s aspirations from the book were that it has to be informative, a narrative and an archive. He blissfully got all achieved.
The book presents an efficient record of ADB’s presence in the region over 50 years and how it has unfailingly responded to Asia’s challenges given its unique regional perspective. Nakao while commenting on the book said, “The unique character of this book is to discuss Asia’s economic history, from the perspective of development and based on the rich experience of ADB’s interaction with countries.”
The Foreword of the book has been penned by Nakao himself. He writes: “From this 50-year ADB history book, we can tell that ADB is a child of the genuine aspiration by people across the region and that the establishment of ADB represents a spirit of regional cooperation.”
In a quick flashback on ADB’s achievements resulting in overall development of the member countries, he summarised them into three broad functions. First, combining finance (loans and grants) with knowledge in infrastructure and social sector projects; second, promoting good policies through dialogue, capacity building, and policy-based lending; and third, catalyzing regional cooperation and friendship.
The book has much to offer in terms of an authentic read on the regions’ overall economic picture since this is the first detailed corporate history of ADB in 30 years, following “A Bank for Half the World” the last one published in 1987 to commemorate the 20th anniversary.
The contents, presented in over 500 pages of “Banking on the Future of Asia and Pacific” not just hold interesting episodes from the past, but also outlay the implications for future role of ADB in Asia and the Pacific.
This published account not just raises several questions but tries to answer many for “lesson learning”. It deals at length with the outstanding features of regional development to which ADB had to respond to, the manner in which the bank has grown and evolved through changing circumstances, response of ADB’s successive leadership in promoting reforms while preserving continuity, the role ADB has played in the transformation of Asia and the Pacific over the past 50 years.
As ADB continues to evolve and adapt to the region’s changing development landscape, the experiences highlighted in this book can provide valuable insight on how best to serve Asia and the Pacific in the future.
At the very onset of the book a graphic outlay of members and a comprehensive timeline of the ADB give a quick succinct glimpse into institutional, operational and financial highlights of the bank thus inviting the reader to read on.
Introducing the very nature of the bank, it sets the tone by quoting from Article 1, ADB Charter 1966 that “The purpose of the bank shall be to foster economic growth and co operation in the region of Asia and the Far East…and to contribute to the acceleration of the process of the developing member countries in the region, collectively and individually”.
The book gradually unfolds to give insights into bank’s multilateral nature, its development role, and the type of financing institution it has been over these 50 years. By multilateral it means that the members of the institution are governments both from across the Asia and Pacific region and from non regional countries.
In early 1960s while discussing formation of the bank, one suggestion was that full participation should be restricted to Asian countries. But later on to attract greater international recognition and thereon funding, the membership was extended to countries in North America and Europe. Finally when the bank was established in 1966, it had 31 members: 19 from Asia and the Pacific region and 12 from elsewhere.
Presently by 2016 it had 67 members: 48 in Asia and the Pacific region and 12 from elsewhere, all with equal legal standing in the bank. However, to protect the Asian influence in key decisions in the organizstion it is set down in the ADB charter that regional members must always hold at least 60 percent of the capital stock.
At the time of the bank’s establishment, prospects for developing countries in Asia and Pacific were not at all encouraging and average living standards in the three most populous countries - the People’s Republic of China, India and Indonesia were very low. The ADB in 1966 saw a region largely defined by poverty, insecurity, and uncertainty.
However with the development agenda over the next half century, the picture was dramatically transformed. During the 1970s and into the 1980s, living standards rose on a strong tide of economic growth, propelled in many countries by the Green Revolution and export oriented industrialisation.
As the book proceeds to delve into the history of the region, three broad themes reflecting trends across the region emerge. The first is that of transformation. “The vibrant developing Asia of 2016 presents a picture entirely different from the discouraging scene of the mid 1960s,” the book mentions, pointing towards determination to promote change that led to an astonishing transformation across developing countries in Asia and the Pacific.
The second theme points to the importance of resilience that the region has shown in times of confusion and distress. “Whether the shocks have been economic, financial, or humanitarian, developing countries in Asia have rebounded,” says the book praising the countries struck by these shocks and their ability to sail through.
The third theme relates to stability; not just maintenance of fiscal and monetary policies but spread of peace and enhancing cooperation. The book recollects that in mid 60s much of the developing Asia was marked by regional instability and open conflict. However, the succeeding decades witnessed many successful steps to reduce conflict and encourage regional cooperation. Today, across developing Asia there is a strong sense of regional stability for mutual benefits.
The book outlines ADBs participation in this remarkable period of change. It details out, as said earlier, decade wise programmes and achievements. “In the early years, loans were mainly for public sector projects such as agricultural developments, roads, industrial programmes, and finance institutions. Later, the bank expanded into other areas, introducing new forms of loans and other financial assistance. Nowadays, ADB offers developing member countries access to a wide range of loans and grants as well as equity investments and bank guarantees.”
While expanding on the bank’s role for development, the book records that the ADB maintains a very efficient and extensive data base of knowledge and information. In the early 1980s, the fourth president, Masao Fujioka, planned for the ADB to become a “development resource centre for Asia and Pacific”.
Very interestingly the book mentions that the first loan at the ADB took a considerable length of time to get approved. “Takeshi Watanabe emphasised the importance of prudent considerations of lending and it took more than one year to approve the first loan.” It reflects upon the bank’s commitment to its charter that emphasises economy and efficiency.
When the bank was established in 1966, it had an initial authorised capital of $1 billion. By the end of 1966, members had subscribed $970 million of this amount, only 50 percent of which was “paid-in”. The other half was in the form of ‘callable’ shares. Compared to the needs for finance to support investment in developing countries in Asia, these amounts were modest.
As the institution expanded, it needed more capital. Subsequent increases in the subscribed capital, along with contributions from donor countries, allowed ADB to expand its lending. By 2009 the members had agreed to five general capital increases (GCIs). At the end of 2016, the total authorised capital was $143 billion; the subscribed capital was $142.7 billion, of which only $7.2 billion was paid-in. Separately, through 12 rounds of ADF replenishment, 34 donors had contributed $35 billion.
In the early years, ADB’s lending was around $100 million per year. By 2005, annual approvals were $6.3 billion ($4.7 billion in OCR loans, $1.4 billion in ADF loans, $247 million in ADF grants), and by 2016 they had reached $17.5 billion ($14.4 billion in OCR loans, $2.6 billion in ADF loans, plus another $518 million ADF grants).
The book provides a good read for all those interested in the region’s economic progress and its growth potential. It is easy to read, unlike many other texts on similar topics. The narration is slick and goes unharmed by intermittent mention of figures and stats. What makes the book more appealing is inclusion of first hand experiences and personal accounts along with some historic photographs.
Overall “Banking on the Future of Asia and the Pacific: 50 Years of the Asian Development Bank” qualifies to be an excellent historical account of the Asian Development Bank. It truly realises the vision of the sitting President Takehiko Nakao who believes “that it is the duty of any institution, specially a public one, to keep a good, objective, and comprehensive record of its history, preferably in a book which is interesting to read”.
As the ADB continues to evolve and adapt to the region’s changing development landscape, the experiences highlighted in this book can provide valuable insight on how best to serve Asia and the Pacific in the future.
The writer is the Business Editor at The News International.