Written by Serey Sok and Nyda Chhinh

Cambodia’s growing population (14.7 million in 2013) is steadily becoming more urbanized, standing at 19.5% in 2008 to 21.4% in 2013, whilst still remaining overwhelmingly rural. Despite this, between 2010 and 2015, its economy grew rapidly, outstripping neighbouring countries, with an annual GDP growth averaging more than 7%. Such growth has contributed significantly to poverty reduction; the rate has been reduced from 53.2% in 2007 to 13.5% in 2014 (Figure 1). As a result, Cambodia has been re-classified as a lower-middle-income economy by the World Bank Group in 2015; its Gross Net Income (GNI) per capita was then $1,070.

Figure 1. Poverty rate and Gini Coefficient Index, 2004−2014. Source of data: MoP, 2015

As levels of poverty reduce, so does, in theory, inequality. Yet, three quarters of the national population are still classified as poor or nearly poor, below or slightly above the poverty line. Between 2004 and 2007, inequality started to rise, but has steadily declined since 2007. A very great proportion of the population is concentrated toward the bottom of the income distribution, and the poverty rate is highly sensitive to where the line is drawn. According to the Cambodia Socio-Economic Survey (2016), disposable income per capita in Phnom Penh is twice as high as those in rural areas and higher than in other urban areas. Since 2006, the Ministry of Planning has established the IDPoor Programme, to regularly update and guide governmental agencies and NGOs through providing target services and assistance to the poorest and most vulnerable households (Table 1). 90% of Cambodians have been covered by the IDPoor Programme, having assisted 13 million people as of December 2017.

Province Population Poor Level 1 Poor Level 2 Overall
People Household People % People % People %
Banteay Meanchey 677,766 161,006 39,670 5.9 77,727 11.5 117,397 17.4
Battambang 1,044,508 240,201 137,126 13.1 203,278 19.5 340,404 32.6
Kampong Cham 972,944 233,001 67,727 7.0 97,321 10.0 165,048 17.0
Kampong Chhnang 516,837 115,051 61,783 12.0 72,943 14.1 134,726 26.1
Kampong Speu 785,306 166,046 42,624 5.4 61,805 7.9 104,429 13.3
Kampong Thom 700,846 153,512 55,408 7.9 86,975 12.4 142,383 20.3
Kampot 577,836 134,428 29,550 5.1 47,630 8.2 77,180 13.3
Kandal 1,078,010 239,331 52,364 4.9 120,263 11.2 172,627 16.1
Koh Kong 85,472 24,025 12,413 14.5 19,345 22.6 31,758 37.1
Kratie 337,057 2,769 35,149 10.4 44,907 13.3 80,056 23.7
Mondul Kiri 65,251 14,041 3,553 5.4 10,136 15.5 13,689 20.9
Phnom Penh 725,787 152,473 28,007 3.9 43,227 6.0 71,234 9.9
Preah Vihear 205,536 45,050 16,329 7.9 28,930 14.1 45,259 22.0
Prey Veng 1,121,131 261,523 80,781 7.2 150,975 13.5 231,756 20.7
Pursat 431,219 95,614 41,918 9.7 56,221 13.0 98,139 22.7
Ratanak Kiri 165,213 33,759 8,271 5.0 20,733 12.5 29,004 17.5
Siem Reap 897,212 190,106 52,868 5.9 92,158 10.3 145,026 16.2
Preah Sihanouk 179,288 38,687 9,006 5.0 18,290 10.2 27,296 15.2
Stung Treng 118,443 25,279 7,271 6.1 13,719 11.6 20,990 17.7
Svay Rieng 557,069 132,524 26,300 4.7 56,512 10.1 82,812 14.8
Takeo 940,076 205,785 69,873 7.4 127,883 13.6 197,756 21.0
Otdar Meanchey 224,165 53,215 15,479 6.9 22,022 9.8 37,501 16.7
Kep 37,671 8,383 1,920 5.1 4,663 12.4 6,583 17.5
Pailin 59,227 13,249 7,123 12.0 7,840 13.2 14,963 25.2
Tboung Khmum 768,103 176,184 47,599 6.2 88,042 11.5 135,641 17.7
Cambodia 13,271,973 2,915,242 950,112 7.2 1,573,545 11.9 2,523,657 19.0

Table 1. Identification of Poor Household by Province  Source: MoP, 20018

There’s a strong correlation between growth inequality and poverty reduction. Aghion et al. (1999) reveal why and how high inequality can affect growth; inequality can increase or decrease economic growth. In Cambodia, rapid economic growth witnessed between 2004 and 2007 was associated not only with the fall of the national poverty rate, but also with rising levels of inequality. In practice, economic growth does not always result in social development. The human development approach, developed by the economist Mahbub Ul Haq, is anchored in Amartya Sen’s work on human capabilities, often framed in terms of whether people are able to “be” and “do” desirable things in life. In 1990, the first Human Development Report was launched as an index to measure average achievement in certain key dimensions of human development in terms of life expectancy, education, and per capita income indicators.

Cambodia’s GDP has gradually increased from US$6.813 trillion in 1994 to US$41.968 trillion in 2008. In 2008, the GDP more than doubled to $ 89.754 trillion in 2017. From 2012 onward, foreign aid has decreased and instead been substituted with FDI.  Under the Generalised System of Preferences (GSPs), the EU is the largest destination for Cambodia’s exports, overtaking the US in 2012 and accounting for USD 4.1 billion (35%) in 2015. The US and Japan account for 30% of Cambodia’s exports, meaning that two thirds of Cambodia’s exports go to just three countries. Based on its strong record of economic growth, poverty reduction and Rectangular Strategy implementation, Cambodia has now surpassed the Human Assets Index threshold for LDC graduation and is fast entering the Economic Vulnerability Index lower bound. Furthermore, Cambodia now ranks fifth amongst all countries in achieving the Millennium Development Goals (MDGs) including halving the poverty rate (CMDG 1). Finally, Cambodia has also committed to accomplishing the Sustainable Development Goals (SDG) between 2015 and 2030; two of the 17 goals are already taken cared of; “No poverty” and “Zero hunger” for all Cambodian people.

In the short-run, Cambodia must reduce growth at the expense of natural resources and allocate those resources for the rural poor households. In the medium-term, Cambodia must re-invest into natural capital such as reforestation to maintain the ecological balance so that the natural environment canbe restored. Meanwhile, more public investment on education, health and social welfare will help to reduce poverty in a sustainable manner. It should be re-stated that Cambodians are still heavily relying on the natural environment to sustain their livelihood, from fisheries to non-timber forest products. Any environmental degradation would spell disaster for the poor.

Serey Sok and Nyda Chhinh both work in the department for economic development at the Royal University of Phnom Penh (RUPP), Cambodia. Contact: sok.serey@rupp.edu.kh Image credit: CC by United Nations Development Programme/Flickr

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