Economic Development in Cambodia: Toward Pro-Poor?

Economic Development in Economic Development in Cambodia: Toward Pro-Cambodia: Toward Pro-Poor?Poor?

By Heng ChouCambodian Rehabilitation and Development BoardCouncil for Development of Cambodia

“Dialogue on Emerging Asian Approaches to Development Cooperation”New Delhi, 05-07 March 2012

A brief history of modern A brief history of modern CambodiaCambodia1991 Signing of the Paris Peace

Accord1993 First UN-supervised elections1998 Peace fully achieved and

national unity2003 Constitutional reforms

ensuring political stability

Young country, on fragile foundation, yet firmly moving forward

Characteristics of Characteristics of Cambodia’s economic Cambodia’s economic growthgrowth

An unusual growth An unusual growth performanceperformance

Income doubled during past Income doubled during past decadedecade

Yet benefits unevenly Yet benefits unevenly distributed…distributed…Living standards improved but at

different rates

With growth, inequality With growth, inequality increasesincreases

Inequality driven by rural Inequality driven by rural inequalityinequality

This represents a development This represents a development and legitimacy challenge for a and legitimacy challenge for a democratic governmentdemocratic government

Royal Government of Royal Government of Cambodia:Cambodia:Extending growth to the poor Extending growth to the poor and the vulnerableand the vulnerable

Rectangular Strategy for Rectangular Strategy for Growth, Employment, Growth, Employment, Efficiency and Equity Phase 2 Efficiency and Equity Phase 2 launched in 2008launched in 2008“Although we have managed to reduce

poverty rate … through high economic growth and pro-poor policies … the rural poverty rate remains high. Furthermore the gap between the rich and the poor… remains a challenge.”

“RS II is a long term strategy based on the following fundamentals: ….Third—ensuring equitable distribution of opportunities and the fruits of economic growth.”

Public Financial Management Public Financial Management Reform Program 2004-2015Reform Program 2004-2015

Pre-PFM public finance: allocative deficiency

PFM: improve budget credibility and allocative efficiency

Priority spendingPriority spendingEducationHealthAgricultureRural development

Spending for agriculture (% Spending for agriculture (% GDP 2007-2009)GDP 2007-2009)

Government capital Government capital spending (% of government spending (% of government spending 2007-2009)spending 2007-2009)

Social safety net for the Social safety net for the poor?poor?Recognition of the need for a social

safety netBuilding blocks are still emerging

and fragmented◦Health equity fund for example;

selectively implemented.◦ ID Poor (identification of the poor)

Limited coverage and finance2008 Cambodia Development

Cooperation Forum: consensus yet need for more time and work

Development cooperation: a Development cooperation: a tool for social redistribution?tool for social redistribution?

A changing landscape for development cooperation in Cambodia

Marginalization of ODA?

Growth and increased Growth and increased spending capacityspending capacity

Cambodia is an attractive FDI location

ConclusionConclusionCoherent pro-poor growth strategy

is still emerging.The core of pro-poor growth

strategy must center around agriculture on which a majority of the population depends their livelihood.

If managed and allocated well, aid can be a useful tool in a pro-poor growth strategy.