ADB report highlights new way to measure poverty in Asia

By Lalin FERNANDOPULLE

[email protected]

Lack of investments for infrastructure development, poor quality services and the North East conflict perpetuates poverty in rural areas, said Country Director, Asian Development Bank (ADB), Richard Vokes.

He said the Report on a New Way to Measure Poverty in Asia and the Pacific region is an important study since it provides information on accurate levels of poverty adopted to specific situations in each country.

The Report, published in a special chapter of Key Indicators 2008, the flagship annual statistical publication of the ADB, outlines important methodological issues involved in generating internationally comparable estimates of poverty.

The special chapter, titled Comparing Poverty Across Countries: The Role of Purchasing Power Parities (PPP) also provides comparable rates of poverty using price data specific to the region and mainly to the poor.

Vokes said the Report is based on an extensive study which provides information on the purchasing power parity in the region.

"Our aim in the study is to shed light on how alternative approaches to compiling purchasing power parities can influence internationally comparable estimates of poverty", ADB Chief Economist, Dr. Ifzal Ali said.

Ali said, "This is a landmark study for two reasons. It is the first time a thorough analysis of internationally comparable poverty estimates has been carried out. Secondly, a poverty line that is relevant specifically to the Asia and Pacific region has been adopted.

"While the $1 a day poverty line remains an appropriate benchmark to count the extent of extreme poverty in Asia, and in the developing countries, in a region which has rapid economic growth it reflects the region's dynamism",Dr. Ali said.

A major contribution of the Report is to examine the sensitivity of poverty estimates to different methods to evaluate PPP. PPPs are conversion factors that ensure a common purchasing power over a given set of goods and services.

The Report examines where the poor shop, what they buy, in what quantity and the quality of the products they purchase.