Evaluation of Asian Development Bank’s Funding Priorities on Poverty Reduction and Economic Growth in the Asia-Pacific Region

This paper evaluates the policy validity or empirical appropriateness of the Asian Development Bank (ADB) funding priorities on poverty reduction and economic growth. Specifically, the paper tested if the ADB funding priorities effectively reduce poverty and increase economic growth in the Asia-Pacific region. That is if the ADB funding priorities do vary inversely to poverty and directly to economic growth. The study uses panel data from 2006 to 2017 from 38 Asia-Pacific countries. The data is analysed with the random effect with linear regression correlated panels corrected standard errors (PCSEs) model. The paper finds that the effective bank priorities for poverty reduction are education services, investment opportunities, and rule of law. However, health services increase the poverty rate in the region. Furthermore, the paper evidenced that bank funding priorities vary directly to economic growth and are inversely proportional to poverty reduction. The paper concludes that implementation of bank funding priorities-based projects improves economic growth through poverty reduction and vice versa. The paper recommends the adoption of the ADB funding priorities subject to the equalled or evenly policies on income and non-income opportunities distributions; particularly, education, health and water services to target the poor across the region.