Cambodia

Topics: Economics, Monetary policy, Economic growth Pages: 30 (10261 words) Published: April 18, 2013
ADB Economics Working Paper Series

Cambodia: Rapid Growth with Institutional Constraints
Hal Hill and Jayant Menon No. 331 | January 2013

ADB Economics Working Paper Series

Cambodia: Rapid Growth with Institutional Constraints
Hal Hill and Jayant Menon No. 331 January 2013
Hal Hill is Arndt Professor of Southeast Asian Economies, Australian National University. Jayant Menon is Lead Economist, Office of Regional Economic Integration, Asian Development Bank. We acknowledge with thanks the excellent research assistance of Anna Cassandra Melendez, the support of the ADB Cambodia resident mission, and very helpful discussions with friends and officials during our various visits to Cambodia. For helpful comments on an earlier draft, we thank Colin McKenzie, Takatoshi Ito, Shujiro Urata, Sothea Oum, Peter Warr, Hang Chuon Naron, Chan Sophal, Dyna Heng, Richard Pomfret, Yu Yongding, Jong Wha Lee and Marcus Noland. The views expressed in this paper are those of the authors and do not necessarily reflect the views and policies of the Asian Development Bank, or its Board of Governors or the governments they represent.

Asian Development Bank 6 ADB Avenue, Mandaluyong City 1550 Metro Manila, Philippines www.adb.org © 2013 by Asian Development Bank January 2013 ISSN 1655-5252 Publication Stock No. WPS135358

The views expressed in this paper are those of the author and do not necessarily reflect the views and policies of the Asian Development Bank (ADB) or its Board of Governors or the governments they represent. ADB does not guarantee the accuracy of the data included in this publication and accepts no responsibility for any consequence of their use. By making any designation of or reference to a particular territory or geographic area, or by using the term “country” in this document, ADB does not intend to make any judgments as to the legal or other status of any territory or area. Note: In this publication, “$” refers to US dollars.

The ADB Economics Working Paper Series is a forum for stimulating discussion and eliciting feedback on ongoing and recently completed research and policy studies undertaken by the Asian Development Bank (ADB) staff, consultants, or resource persons. The series deals with key economic and development problems, particularly those facing the Asia and Pacific region; as well as conceptual, analytical, or methodological issues relating to project/program economic analysis, and statistical data and measurement. The series aims to enhance the knowledge on Asia’s development and policy challenges; strengthen analytical rigor and quality of ADB’s country partnership strategies, and its subregional and country operations; and improve the quality and availability of statistical data and development indicators for monitoring development effectiveness. The ADB Economics Working Paper Series is a quick-disseminating, informal publication whose titles could subsequently be revised for publication as articles in professional journals or chapters in books. The series is maintained by the Economics and Research Department.

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CONTENTS

ABSTRACT EXECUTIVE SUMMARY I. II. III. INTRODUCTION THE DEVELOPMENT CONTEXT DEVELOPMENT OUTCOMES A.  Rapid Growth and Structural Change B.  Falling Poverty, Rising Inequality C.  Macroeconomic Policy and Outcomes IV. CONCLUSIONS

v vii 1 1 5 5  9  11 16 18 

REFERENCES

ABSTRACT      
This paper examines Cambodia’s socioeconomic development since the early 1990s peace settlement. The country’s economic growth has arguably been the fastest among post-conflict societies, driven by the credible restoration of peace and security, large public and private capital inflows, economic openness, reasonably prudent macroeconomic management, and a dynamic, integrating neighborhood. A legacy of history and small size is that the government has limited policy space, although this has not necessarily retarded economic development. We also...

References: Beresford, M., N. Sokha, R. Roy, S. Sisovanna, and C. Namazie . 2004. The Macroeconomics of Poverty Reduction in Cambodia. Phnom Penh: United Nations. Chandler, D. 2008. A History of Cambodia. 4th edition. Chiang Mai: Silkworm Books. Duma, N. 2011. Dollarization in Cambodia: Causes and Policy Implications. IMF Working Paper 11/49. Washington, DC: International Monetary Fund. Guimbert, S. 2010. Cambodia 1998–2008: An Episode in Rapid Growth. World Bank Policy Research Working Paper 5271 Washington, DC: World Bank. Hill, H., and J. Menon. 2011. Reducing Vulnerability in Transition Economies: Crises and Adjustment in Cambodia. ASEAN Economic Bulletin, 28 (2). pp. 134–159. Hughes, C., and K. Un, eds. 2011. Cambodia’s Economic Transformation. Copenhagen: NIAS Press. International Monetary Fund. 2012. Cambodia: Staff Report for the 2011 Article IV Consultation. Washington, DC. Menon, J. 1998. De-dollarising Cambodia. Cambodian Development Review, 2 (2). pp. 6–9. ———.2008. Cambodia’s Persistent Dollarization: Causes and Policy Options. ASEAN Economic Bulletin, 25 (2). pp. 228–37. Naron, Hang Chuon. 2011. Cambodian Economy: Charting the Course of a Brighter Future – A Survey of Progress, Problems and Prospects. Singapore: Institute of Southeast Asian Studies. Pomfret R. ASEAN’s New Frontiers: Integrating the Newest Members into the ASEAN Economic Community. Asian Economic Policy Review, 8 (1). Forthcoming. World Bank. 2009. Sustaining Rapid Growth in a Challenging Environment. Cambodia Country Economic Memorandum. Washington, DC. World Trade Organization (WTO). 2011. Cambodia – Trade Policy Review. Geneva.
Cambodia: Rapid Growth with Institutional Constraints Cambodia’s economic growth has been one of the fastest among post-conflict societies, driven by the credible restoration of peace and security, large public and private capital inflows, economic openness, prudent macroeconomic management, and its location in a dynamic, neighborhood. A legacy of history and small size is that the government has limited policy space, although this has not retarded economic development. But challenges remain, including rising inequality, uneven spatial development, weak institutions, and high levels of corruption.
About the Asian Development Bank ADB’s vision is an Asia and Pacific region free of poverty. Its mission is to help its developing member countries reduce poverty and improve the quality of life of their people. Despite the region’s many successes, it remains home to two-thirds of the world’s poor: 1.7 billion people who live on less than $2 a day, with 828 million struggling on less than $1.25 a day. ADB is committed to reducing poverty through inclusive economic growth, environmentally sustainable growth, and regional integration. Based in Manila, ADB is owned by 67 members, including 48 from the region. Its main instruments for helping its developing member countries are policy dialogue, loans, equity investments, guarantees, grants, and technical assistance.
Asian Development Bank 6 ADB Avenue, Mandaluyong City 1550 Metro Manila, Philippines www.adb.org/economics
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