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ADB has assisted the Asia and Pacific region over the past four decades. The region is now recognized as the most economically dynamic in the world, and the incidence of poverty has fallen sharply. When ADB started operations, however, the region was one of the poorest, and most countries had limited foreign exchange reserves. In the 1970s and 1980s, ADB was predominantly a project lender, supporting DMCs’ investment needs in agriculture, industry, and infrastructure. However, issues of sustainable, inclusive development and quality of life became increasingly important. Over the past three decades, to address these issues and meet the new needs they entail, ADB has shifted its operations from supporting mainly economic growth and physical infrastructure to a greater emphasis on poverty reduction, social development, gender equality, environmental sustainability, policy reform, and regional cooperation. ADB has, thus, changed from being essentially a provider of project finance to a more broad-based institution with greater emphasis on policy and institutional support and on knowledge products and services to complement resource transfers.

The first two decades of ADB’s experience showed that a sound policy and institutional framework is critical for ensuring the intended development impacts of projects. This lesson was equally pertinent as ADB ventured into the cross-cutting areas of poverty reduction, human development, gender issues, environmental management, and good governance. Policy dialogue on sector issues assumed ever greater importance. Besides seeking improvements on a project-by-project basis, ADB began, in the mid-1980s, to support wider sector policy and institutional reform. To facilitate this process, ADB complemented project lending with new modalities: program lending (instituted in the mid-1980s) and sector development programs (in the mid-1990s). In 2005, ADB introduced the multitranche financing facility and other financing instruments and modalities, on a pilot basis, to improve its business processes, align its programs more closely with client priorities, reduce bottlenecks in processing development assistance, and expand its product offerings.

Because of its Asian character and experience, DMCs regard ADB as a trusted partner that understands Asia’s diverse cultural norms and the wide range of development issues in the region. ADB is knowledgeable about the importance, sensitivity, and complexity of governance issues in the region. The trust of its DMCs enabled ADB in 1995 to become the first multilateral development bank with a Board-approved governance policy. It has learned from the varied governance experience in the region, including that derived from its “graduates”—regional members that no longer receive direct ADB assistance. This was demonstrated by ADB’s rapid response to countries hit by the 1997 financial and economic crisis.

The importance of the private sector, both domestic and foreign, in the development process is recognized. ADB conducts both public and private sector operations within a single institutional setup. It thus has the potential to be a broker between the public and private sectors. DMCs must be able to rely on ADB for assistance and advice on expanding the role of the private sector with appropriate safeguards in place for regulatory, financial, social, and environmental priorities. The private sector, meanwhile, should be able to rely on support from ADB in mitigating risks and strengthening domestic financial and capital markets. ADB can also catalyze resource transfers through cofinancing.

All shareholders recognize ADB’s efforts to promote regional and subregional cooperation. The successful Greater Mekong Subregion program, begun in a postconflict situation, is an example of the dividend that can be realized when peace prevails. ADB also supports subregional initiatives relevant to development in the Pacific DMCs, the Central Asian republics, and the Brunei Darussalam-Indonesia-Malaysia-Philippines East ASEAN (Association of Southeast Asian Nations) Growth Area. Regional cooperation and integration initiatives offer increasing possibilities for development in the Asia and Pacific region.

ADB has been responsive to environmental concerns since its creation. Its involvement in environmental management has increased substantially since the mid-1980s. The environmental aspects of all its projects and programs are reviewed, and ADB has assisted DMCs in building institutions dealing with environmental concerns and policies. ADB has succeeded in placing environmental issues at the forefront of development planning, and has raised region-wide awareness. ADB must build on its record to help realize the environmental targets of the Millennium Development Goals.

ADB’s operations have faced some major challenges. Assistance for capacity building has not been fully effective, as it was often related to the needs of projects rather than those of institutions. Even then, targeting of beneficiaries and interactions with them in the context of project preparation and implementation have not always been sufficient. ADB could also have provided clearer policy advice based on more rigorous analytical work.

ADB has taken initiatives to enhance its focus and improve development effectiveness. Two major changes in thinking and approach include the poverty reduction strategy³ and the private sector development strategy, ⁴ approved in 1999 and 2000, respectively. At the same time, the resident mission policy, ⁵ adopted early in 2000, was expected to lead to improved country focus in operations and a much closer relationship with DMCs. The long-term strategic framework, 2001–2015, ⁶ spells out ADB’s vision of a region free of poverty and provides an agenda for ADB’s poverty-reduction and growth-financing activities over 15 years, with an accent on sustainable economic growth, inclusive social development, and good governance for effective policies and institutions.

Box 1: The Changing Operations Evaluation Landscape

The context of development is changing, and there is a sense that its rate and extent are now greater than ever. The drivers of change are global and regional as much as national. OED needs to think and work in new ways, learn from the past, but also look to where operations evaluation is heading.

• New emphasis on aid effectiveness. The recent emphasis on aid effectiveness is not only due to increased demand for better development results and accountability, but is also partly a result of budgetary constraints.

• New agendas. Development agencies face challenges caused by the crowded policy agenda. There are many elements to this, including the need to address issues, such as conflict reduction and prevention, fair international trade, environment agreements, gender, a new international financial architecture, more effective working arrangements among the United Nations family and other global institutions, stronger civil society, country ownership and leadership of poverty reduction processes, and harmonization of activities among the aid community. Many of these suffer from definitional problems and unclear time horizons, making them intrinsically difficult to evaluate.

• New partners. Development agencies find themselves working with new partners and in different partnership configurations. Multi-agency consortia are becoming more common, and agencies are moving beyond government-to-government links to forge direct links with the private sector, nongovernment organizations (NGOs), and civil society organizations.

• New pressures. The growing influence of NGOs is adding a dimension, often positive, to debates on aid and the delivery of development services. When focusing on single issues, these groups gain media attention and use the Internet to organize and mobilize. They have sometimes had contentious relationships with ADB. They have become increasingly powerful and cannot be ignored.

• New instruments. New instruments are being tried, including sector-wide approaches, the comprehensive development framework, poverty reduction strategy papers, poverty reduction and growth frameworks, medium-term expenditure frameworks, and the sustainable livelihoods approach. Some of these imply changes in the way development agencies work, requiring significant shifts in how evaluation is approached.

• New horizons. Aid delivery has been shifting from the project to the program to the country level. But there is also an array of complex issues that require a regional or global approach, including climate change, trade, migration, genetically modified organisms, HIV/AIDS, and avian flu.

Recently, the medium-term strategy of 2006–2008,⁷ the second in a series designed to flesh out the long-term strategic framework for shorter periods, adjusted operational priorities in response to evolving conditions. It identifies five priorities: (i) catalyzing investment, as a prerequisite for sustaining high growth, employment creation, and rising productivity; (ii) strengthening inclusiveness and the poverty-reducing impact of growth through rural infrastructure development and social development; (iii) promoting regional cooperation and integration as a means of reinforcing national-level poverty reduction strategies at the regional level; (iv) managing the environment to ensure that the pattern of economic growth is also environmentally sustainable; and (v) improving governance and preventing corruption, which is key to improving the development effectiveness and poverty-reducing impact of ADB’s operations. The second medium-term strategy also introduced certain adjustments in ADB’s business processes, including a more selective sector focus. Core sectors identified for future operations include road transport, energy, urban infrastructure, rural infrastructure, education, and the finance sector. The role of ADB in leveraging additional investment through financing partnerships and cofinancing was emphasized, as well as strengthening project implementation to achieve development results. Implementation is to be country focused, and it is operationalized through individual country partnership strategies. The rapidly changing development context requires continuing sharpening of methods, guidelines, and directions for operations evaluation, as well as new products and services.