Growth and Inclusion in the GMS Countries: An Assessment

1
Growth and Inclusion in the GMS
Countries: An Assessment
By
Srinivasa Madhur
Director of Research,
Cambodia Development Resource Institute
(CDRI), Phnom Penh, Cambodia
Global Development Network Meeting
Asian Development Bank (ADB),
Manila, Philippines, 20 June, 2013
(This presentation is based on a
forthcoming paper on the same subject
co-authored with Jayant Menon, Lead
Economist, ADB)

2
Three key questions addressed
• How inclusive has growth and development been in the GMS
countries?
• What are the key patterns of development inclusiveness
emerging across the GMS countries?
• What lessons for making development more inclusive in the
future
(The empirical evidences are examined against the
backdrop of an analytical framework – not presented here
- that defines inclusiveness, explains its many dimensions,
and reasons out why it should be the overarching
development goal)

3
GMS, GMS countries, and the
coverage of this study
• GMS – Cambodia, Laos, Myanmar, Vietnam, Thailand, China’s
Yunan Province and Guangxi Zhuang autonomous region)
 A natural geographic and economic area linked by the Mekong
River
 2.6 million square kilometers About 326 million people
 An Average per capita income of about $1500 (at current
exchange rates)
• GMS countries - Cambodia, Laos, Myanmar, Vietnam,
Thailand, China – 6 countries
• This study covers the GMS countries (except Myanmar),
rather than the GMS per se

4
Looks mainly at the economic, social, and
governance dimensions of inclusiveness
• Economic dimensions - growth inclusiveness :
 Growth and structural changes
 poverty (national, $1.25-a-day and $2-a-day)
 income/consumption inequality
 income/consumption polarization
• Human development and social inclusiveness:
 Health
 Education
 Social protection and gender equity
 Other vulnerabilities
• Governance dimensions:
 Governance
 Democratization

Main messages – economic
inclusiveness
• GMS countries had strong growth, dynamic structural changes, and modest
economic catch-up/convergence.
• Today, the GMS is mostly a middle income region (Cambodia about to be) and
a rapidly industrializing and urbanizing sub-region in Asia.
• Today as in 1995,CAM the poorest and Thailand the richest – yet Thailand’s
income now 3.7 times that of Cambodia, compared to about 7 times in 1995.
• In 995, Thailand was thrice as rich as China; today the two have similar incomes
• Poverty reduction equally impressive – Vietnam’s growth most pro-poor/poor-
friendly, Laos’s the least (with China and CAM in between).
• Remaining poor in many of these countries typically the hard-to-reach kind
• Moreover, a number of economic and environmental vulnerabilities - increasing
in some countries – threaten people’s livelihoods and quality of life more
generally
• Beyond poverty, growth could have been more inclusive, had overall income
distribution and polarization not worsened/remained high (with exceptions)
5

Main messages – human development and
social inclusiveness
• Substantial human development – between 1995-2012, HDI increases of 35-
41% range, excluding Thailand).
• GMS people lead healthier lives now - big strides in mortality (life expectancy,
maternal, infant), large declines in undernourishment, modest containment of
contagious diseases
• Thanks to better sanitation, cleaner drinking water, improved health care – in
turn partly due to increased public investment in health
• GMS people better educated now – huge increases in literacy rate, student
enrollment (especially in primary but also in secondary), and years of schooling
• GMS countries also making progress in social protection, gender equity, and
women empowerment
• Despite the long distance travelled by GMS countries in human development,
the distance to destination (say, a socially equitable society) is equally large
• That is true in many spheres of human development and social inclusion, but
especially in health and education, as also in managing severe vulnerabilities
6

Main messages – governance and
democratization
• Governance - difficult to measure - survey-based and perception based
indicators the “gold standard” in empirical assessment
• By WB indicators, Thailand tops the list in most areas (except pol. stability)
• China at the top spot on govt. effectiveness but at the bottom in terms of voice
and accountability
• Other countries share strengths (Cambodia in voice and accountability, Laos and
Vietnam in political stability), and weakness ( Cambodia and Laos in rule of law
and corruption, Laos and Vietnam in voice and accountability)
• Democratization indicators show mixed messages too – overall Thailand at the
top , Laos at the bottom, and other countries with strengths and weaknesses
• Cambodia a good example of mixed progress in democratization - has strengths
in electoral process, civil liberties, and govt. functioning, but does not compare
well in political participation and culture.
• Significant scope for gradual institution-building and governance reforms –
perhaps the most difficult and a highly sensitive issue for the GMS countries
7

GMS no exception to the
“Impossible Trinity of Inclusiveness”
“The political problem of mankind is to
combine three things: economic
efficiency, social justice, and individual
liberty”
(John Maynard Keynes, quoted in UNDP,
Human Development Report, 2013, p.20)
8

Figure and Tables
The main messages are drawn
from the “Figures and Tables”
in the next 37 slides
9

Catching up/income convergence - per
capita income (PPP$ at 2005 prices)
10
Country 1995 2011
Multiples
(2011/1995)
Cambodia 811 2083 2.6
Laos 1114 2464 2.2
Vietnam 1231 3013 2.4
Thailand 5691 7635 1.3
China 1849 7418 4.0
Source: World Bank – World Development Indicators dataset 2013

Structural convergence ? (% of GDP -
constant prices – agri./ ind./ service)
11Source: GMS-DAN country papers (2013)
Country Initial year Latest year
Cam (1993-2011) 46/13/35 25/27/41
Laos (19995-2010) 54/21/25 28/33/39
Vietnam (1999-2010) 32/25/43 16/42/42
Thai (1995-2009) 10/40/50 10/40/50
China(1993-2010) 20/46/34 10/47/43
Yunan (2000-2010) 20/43/37 15/43/42

Structural convergence ? (% of
employment – agri./ ind./ service)
12Source: GMS-DAN country papers (2013)
Country Initial year Latest year
Cam (1993-2011) 80/2/17 62/10/28?
Laos (19995-2011) 85/4/11 72/8/20
Vietnam (1999-2010) 69/15/16 48/22/30
Thailand (1993-2011) 57/17/26 38/21/41
China(1993-2010) 56/23/21 36/28/36
Yunan (2000-2011) 74/9/17 59/13/28

Progress in poverty reduction - headcount
% (National)
13
Country Initial yr. Final yr. pp. per yr.
Cambodia (1993-2011) 45 19.8 -1.40
Laos (1993-2008) 46 27.6 -1.23
Vietnam (1998-2010) 37.4 14.2 -1.93
Thailand (1988-2010) 42.2 7.8 -1.56
China (2003-2010) 6.6 2 -0.66
Yunnan, China (2003-2008) 8.2 5.6 -0.52
Source: GMS-DAN country papers (2013)

Progress in poverty reduction -
headcount % ($1.25-a-day)
14
Cambodia (1994-2008) 48.6 22.8 -1.84
Laos (1992-2008) 55.7 33.9 -1.36
Vietnam (1993-2008) 63.7 16.9 -3.12
Thailand (1990-2009) 11.6 2 -0.51
China (1990-2008) 60.2 13.1 -2.62
Source: ADB 2012 – Myanmar in Transition; WB-WDI dataset 2013

Progress in poverty reduction headcount
($2-a-day)
15
Cambodia (2004-2008) 68.2 53.3 -3.73
Laos (2002-2008) 76.9 66 -1.82
Vietnam (2006-2008) 48.4 43.4 -2.50
Thailand (2004-2009) 11.5 4.6 -1.38
China (1990-2008) 84.6 29.8 -3.04
China (2002-2008) 51.2 29.8 -3.57
Source: WB-WDI dataset 2013; WB-WDI 2010, 2012

Trends in economic inequality –
consumption GINI
Country Initial yr. Final yr. Change
Cambodia (1994-2011)** 38.3 31.0 -7.7
Laos (1992-2008)** 30.5 35.4 4.9
Vietnam (1993-2010)** 33 37.8 4.8
Thailand (1990-2010)** 44 39 -5.0
China (1990-2008)* 32.4 43.4 11.0
16
Sources: * data from ADB, Asian Development Outlook, 2012 ; ** data from GMS-DAN
country papers 2013/or National sources

Trends in economic polarization - consumption
share of top 20% over bottom 20% (Ratio)
17
Country Initial yr. Final yr. Change
Cambodia (1994-2011)** 5.8 6.1 0.3
Laos (1992-2008)* 4.3 5.9 1.6
Vietnam (1992-2008)* 5.6 5.9 0.3
Thailand (1990-2009)* 8.8 7.1 -1.7
China (1990-2008)* 5.1 9.6 4.5
Source: *from ADB-Asian Development Outlook 2012; **from GMS-DAN country papers 2013/national
sources

Trends in human development (HDI)
18
Country 1995 2012 % Change in HDI 1995-2012
Cambodia 0.385 0.543 41.04
Laos 0.388 0.543 39.95
Vietnam 0.457 0.617 35.01
Thailand 0.581 0.690 18.76
China 0.518 0.699 35.02
Source: UNDP-Human Development Report 2010, 2013

Human development (Non-income HDI)
19
Country Nonincome HDI 2012
Cambodia 0.597
Laos 0.584
Vietnam 0.686
Thailand 0.715
China 0.728
Source: UNDP-Human Development Report 2013

Trends in life expectancy at birth (years),
1994-2012
20
63.6
67.8
75.4 74.3 73.7
0.0
20.0
40.0
60.0
80.0
0.0
20.0
40.0
60.0
80.0
Cambodia Laos Vietnam Thailand China
Numberofyears
%change
% change Latest yr.
Source: UNDP-HDR 2002, 2013; World Bank-WDI 2001, 2013, WDI dataset 2013

Trends in healthy life expectancy (years),
1990-2010
21Source: Lancet, 2012 (December) volume 380,, pp. 2144-62.
58 56
65.9 65.3
68
0
10
20
30
40
50
60
70
80
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
year(s)
%change
% Change Latest yr.

Trends in maternal mortality rate (per
100,000 live births), 1990/1999 - 2010
22
206
410
69
12
32
-80
0
80
160
240
320
400
480
-80.0
0.0
80.0
160.0
240.0
320.0
400.0
480.0
per100,000livebirths
%change
% change Latest yr.

Trends in infant mortality (per 1000 live
births), 1994-2011
23
36 34
17
11 13
-70
-50
-30
-10
10
30
50
-70.0
-50.0
-30.0
-10.0
10.0
30.0
50.0
per1000livebirths
%change
% change Latest yr.

Trends in under-five mortality, (per 1000
live births), 1994-2011
24
43 42
22
12 15
-80
-60
-40
-20
0
20
40
-80.0
-60.0
-40.0
-20.0
0.0
20.0
40.0
per1000livebirths
%change
% change Latest yr.

Trends in undernourishment (% of
population), 1990/1992 - 2006/2011
25
17
28
9 7
12
-90
-60
-30
0
30
-90.0
-60.0
-30.0
0.0
30.0
%ofpopulation
%change
% change Latest yr.

Trends in the incidence of tuberculosis
(per 100,000 people), 1994-2011
26
424
213 199
124
75
-60
0
60
120
180
240
300
360
420
480
-60.0
0.0
60.0
120.0
180.0
240.0
300.0
360.0
420.0
480.0
per100,000people
%change
% change Latest yr.

Trends in the prevalence of HIV, total (% of
population ages 15-49), 1990/1999 - 2011
27Source: World Bank – World Development Indicators 2013
0.6
0.3
0.5
1.2
0.1
0
1
2
0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.40
0.45
%ofpopulationages15-49
%pointchange
% point change Latest yr.

Trends in access to improved water
source (% of population with access),
1990/1994 - 2010
28Source: UNDP-HDR 2002, 2013; World Bank-WDI 2001, 2013, WDI dataset 2013
64 67
95 96 91
0
20
40
60
80
100
120
0.0
20.0
40.0
60.0
80.0
100.0
120.0
%ofpopulationwithaccess
%change
Improved water source (% of population with
access), 1990/1994 - 2010
% change Latest yr.

Trends in improved sanitation facilities
(% of population with access),
1990/1994 - 2010
29Source: UNDP-HDR 2002, 2013; World Bank-WDI 2001, 2013, WDI dataset 2013
31
63
76
96
64
0
20
40
60
80
100
120
0.0
50.0
100.0
150.0
200.0
250.0
300.0
350.0
%ofpopulationwithaccess
%change
% change Latest yr.

Births attended by skilled health
staff (% of total), 2006-2011
30
71
37
93
100 100
0
20
40
60
80
100
120
%oftotal

Trends in public expenditure on health
(% of GDP), 1998-2012
31Source: UNDP-HDR 2002, 2013
2.1
1.5
2.6
2.9
2.7
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
%ofGDP
%pointchange

Health gaps between the poor and the rich– big
data gaps
Country
Infant
mortality
rate
Under-5
mortality
rate
Diarrhea*
(% of
children
under age
5)
Acute
Respiratory
Infection
(ARI)**
Prevalence of
child
malnutrition
(underweight)
***
Pregnant
women
receiving
prenatal
care
Births
attended
by skilled
health staff
Cambodia
(2010)
3.3 3.0 1.6 2.4 2.2 0.8 0.5
Laos
(2006)
NA NA 1.9 2.3 2.4 0.2 0.0
Vietnam
(2006)
NA NA NA NA NA 0.7 0.5
Thailand
(2006)
NA NA 1.7 2.1 3.8 1.0 0.9
China NA NA NA NA NA NA NA
32
Note: *Percentage of children under five who had diarrhea in the two weeks preceding the survey;
**Percentage of children under five with symtoms of ARI; ***for Cambodia, it is the percentage below -2
standard deviation (SD) from the WHO Child Growth Standards population median. It includes children who
are below -3 SD.
Source: CDHS 2010; World Bank – WDI 2012, 2013

Trends in youth literacy rate, total (of
people ages 15-24), 1990 - 2005/2010
33
87.13
83.93
96.94
98.05
99.40
75.00
80.00
85.00
90.00
95.00
100.00
105.00
-5.00
0.00
5.00
10.00
15.00
20.00
25.00
ofpeopleages15-24
%change
% change Latest yr.
Source: UNDP-HDR 2005, 2013; World Bank-WDI 2013, WDI dataset 2013

Trends in adult literacy rate, total (% ages 15
and older), 1990 - 2005/2010
34
77.60
72.70
93.20 93.50 94.30
0.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
80.00
90.00
100.00
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
%ages15andolder
%change
% change Latest yr.

Trends in primary school enrollment (%
gross), 1990 - 2002/2011
35
127.00
121.00
106.00
91.00
111.00
0.00
20.00
40.00
60.00
80.00
100.00
120.00
140.00
-20.00
-15.00
-10.00
-5.00
0.00
5.00
10.00
15.00
20.00
25.00
%gross
%change
% change Latest yr.

Trends in secondary school enrollment (%
gross), 1990/1991 - 2002/2011
36
46.00 45.00
77.00 79.00 81.00
0.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
80.00
90.00
0.00
20.00
40.00
60.00
80.00
100.00
120.00
140.00
160.00
180.00
%gross
%change
% change Latest yr.

Trends in tertiary education enrollment
(% gross), 1990 - 2002/2011
37
7.80
13.40
22.30
47.70
25.90
0.00
10.00
20.00
30.00
40.00
50.00
60.00
0.00
200.00
400.00
600.00
800.00
1000.00
1200.00
1400.00
%gross
%change
% change Latest yr.

Mean years of schooling (years), 2010
and expected years of schooling (years),
2011
38
5.8
4.6
5.5
6.6
7.5
10.5 10.1
11.9 12.3
11.7
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
year(s)
Mean years of schooling (years) Expected years of schooling (years)
Source: UNDP-Human Development Report 2013

Trends in public expenditure on
education, total (% of GDP),
1990/1999 – 2000/2011
39
2.60
3.30
6.60
3.80
2.90
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
0.00
1.00
2.00
3.00
4.00
5.00
%ofGDP
%pointchange
Note: The latest data for China is in 2000 (World Bank – WDI 2003)
Source: UNDP-HDR 2005; World Bank – WDI 2003, 2013, WDI dataset 2013

Pupil-teacher ratio, primary,
1997/2000 - 2011
40
47.00
27.00
20.00
0.00
17.00
-40.00
-30.00
-20.00
-10.00
0.00
10.00
20.00
30.00
40.00
50.00
-40.00
-30.00
-20.00
-10.00
0.00
10.00
20.00
30.00
40.00
50.00
ratio
%change
% change Latest yr.

Education gaps between the poor and the
rich –big data gaps
Country
Average years of
schooling
Primary completion
rate
Children out of
school*
Cambodia (2010) 0.2 0.8 3.4
Laos - - -
Vietnam (2006) 0.7 1.0 1.5
Thailand - - -
China - - -
41Source: CDHS 2010; World Bank – WDI 2012, 2013

Social protection (index),
2009
Country SPI SPIP SPINP SPIPFI
Cambodia 0.017 0.012 0.005 1.99
Laos 0.019 0.009 0.010 1.20
Vietnam 0.095 0.017 0.079 0.89
Thailand 0.119 0.030 0.089 1.01
China 0.139 0.008 0.130 0.79
42
Source: ADB, 2011, except for Thailand (ADB, 2012)

Gender equity
Country
Gender Inequality
Index, 2012*
Gender Gap Index,
2012**
Discrimination against
Women, 2012***
Rank Value* Rank Score**
Rank out of
86
countries
SIGI
score***
Cambodia 96 0.473 103 0.6457 13 0.1213
Laos 100 0.483 NA NA 49 0.2599
Vietnam 48 0.299 66 0.6867 43 0.2393
Thailand 66 0.360 65 0.6893 25 0.1475
China 35 0.213 69 0.6853 42 0.2388
43
Note: * 0=when women and men fare equally and 1=where one gender fares as poorly as possible in all
measured dimensions; ** the highest possible score is 1 (equality) and the lowest possible score is 0 (inequality);
*** 0 = low discrimination, 1 = high discrimination
Source: 1. UNDP-HDR 2013; 2. WEF-The Global Gender Gap Index Report 2012; 3. OECD-SIGI, 2012

Vulnerabilities (environmental) and multi-
dimensional poverty index (MDPI)
Country
% Pop living
on degraded
land
Deaths due
to water
pollution
(no. per
million
people)
Deaths due
to indoor air
pollution
(no. per
million
people)
Deaths due to
outdoor air
pollution (no.
per million
people)
Access to
electricity (%
of population)*
Multidimension
al poverty
index (Year)
Year 2010 2004 2004 2004 2009-2011 -
Cambodia 39 826 500 23 37.6 0.212 (2010)
Laos 4 406 459 0 55 0.267 (2006)
Vietnam 8 72 289 81 97.6
0.017
(2010/2011)
Thailand 17 121 159 61 99.3
0.006
(2005/2006)
China 9 42 422 230 99.4 0.056 (2002)
44Source: UNDP-Human Development Report 2010, 2011, 2013; *World Bank - World Development Indicators
dataset 2013, except for Cambodia, national source (CSES 2011)

Governance perception
indicators - 2011
45
Governance
Indicator
2011 2011 2011 2011 2011
Voice and
Accountability
24.9 5.6 8.5 33.3 4.7
Political
Stability/Absence
of Violence
33 47.2 52.8 16.5 25
Government
Effectiveness
25.6 17.1 45 59.7 60.7
Regulatory
Quality
35.1 19.4 29.4 56.4 45.5
Rule of Law 15.5 18.3 39.9 48.8 41.8
Control of
Corruption
12.8 13.7 33.6 43.6 30.3
Source: http://info.worldbank.org/governance/wgi/sc_country.asp, accessed June 1, 2013

Democratization perception
indicators - 2011
Country Rank
Overall
score
Electoral
process
and
pluralism
Functioning
of
government
Political
participation
Political
culture
Civil
liberties
Cambodia 101 4.87 6.08 6.07 2.78 5 4.41
Laos 156 2.1 0 3.21 1.11 5 1.18
Vietnam 143 2.96 0 4.29 2.78 6.25 1.47
Thailand 58 6.55 7.83 6.07 5.56 6.25 7.06
China 141 3.14 0 5 3.89 5.63 1.18
46Source: The Economist Intelligence Unit – Democracy Index 2011

Thank you
IDRC, Canada provided financial
support for this project
The views expressed here are not
necessarily those of IDRC, CDRI, or
ADB
47

Growth and Inclusion in the GMS Countries: An Assessment

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