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CHINAS DEVELOPMENTANDPOVERTY REDUCTION EXPERIENCES:
LESSONSFOR CAMBODIAANDIMPLICATIONSFOR CHINAS ODA
AND DIRECT INVESTMENT
Presented at
An Asian-wide Workshop on
Social Inclusiveness in Asias Middle Income
Countries (MICs)
13 September 2011, Jakarta,Indonesia
Prepared and Presentedby:
Mr. Vathana ROTHResearch AssociateCambodia Development
Resource Institute (CDRI)
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CONTENTS
Analytical Framework: Inclusive GrowthAnalytics
Overview: Main Macro Indicators of China andCambodia
A Look at Chinas Development and Poverty
Reduction Experiences
Lessons: Growth-oriented Poverty Reduction
Lessons: Poverty Reduction Targeting
Implications for Chinas ODA and Direct
Investment in Cambodia 2
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ANALYTICAL FRAMEWORK
3
Sustained and InclusiveGrowth
Broad-based EconomicGrowth
The roleof state
Equality ofopportunity
Structuralreform
Economicdiversification
Raising the pace and enlarging the size of economythrough investment and productive employmentopportunity
Firms Individuals
Poverty reduction
Businesscompetitivenes
s
Source: authors summary from various views
Income
redistribution
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OVERVIEW: MAIN ECONOMIC INDICATORSChina Cambodia
GDP Growth (annual %) (2000-2009) 10.9 9.0
GDP per capita ($ PPP) (2009) 6890 1820
Gross saving (% of GDP) (1993-2009) 44 13
Poverty rate at national poverty line 2007 7% 30%
Poverty rate at intl. poverty line (USD2/day) 51.1%(2002)
68.2% (2004)
Gini Index 42% (2005) 43.1% (2007)
Human Development Index (HDI) 2010 0.663(89) 0.494 (124)
Expenditures for R&D (% of GDP) 2000-08 1.44 0.05
Researcher in R&D (per million people) 2000-08 1071 17
Cereal yields (kg/ha) 2009 5460 2947
Tractor (per ha) 2008 277.1 11.8
Fertiliser (kg/ha) 2008 468.0 22.7
Paved roads (% of total road, 2000-08) 53.5 6.3
Electric power consumption (kWh per capita,2008) 2455 113
4
Sources: World Bank Open Data 2011; WDI 2011; Dollar 2008; UNDP
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MAIN FEATURESOF CHINESE REFORMSANDDEVELOPMENT
Gai Ge Kai Feng, Change the system, open thedoor (Dollar 2008)
Trade liberalization and Export enhancement
Industrial diversification and competitiveness Development of quality infrastructure that connects
urban and rural areas
Continuous attention to agriculture and rural
development The role of state in providing basic public goods
and capable institutions for coordination work
Strong and committed poverty reduction agency 5
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CHINAS DEVELOPMENT MODEL
Chinas reform pyramid Firing from the bottom
Services
Manufacture
Agriculture
Source: Gulati and Fan 2007 cited in Fan et al. 2010 6
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CAMBODIA1993-2009
Agriculture, 15%
Industry, 47%
Services,38%
Source: World Bank Open Data 2011
Industry, 21%
Agriculture,39%
Services,40%
China Cambodia
7
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CAMBODIA1993-2008
Industry,13%
Services,34.3%
Source: ADB Key Indicators 2010
Industry,6.5%
Services,23.1%
China Cambodia
In Cambodia, agriculture continues to play an important role inthe overall economy:job creation and income sourcefor
majority of rural households.
Agriculture, 70.3%Agriculture, 53%
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INDUSTRIALISATION
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Note: Chinas data are from 1990-2009 while those of Cambodia are from 1990-2008
Source: ADB 2010
In Cambodia, industrial diversification and competitivenessshould be the two key areas of further reform for a more viableprivate sector development.
Output Growth, annual %change
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AGRICULTUREAND RURAL DEVELOPMENT
Agriculture sector remains crucial for povertyreduction in China.
Chinas government expenditure for agriculture
= about 9% a year of total national expenditure.
Spending was made to support agricultureproduction, capital construction, science andtechnology promotion funds, rural relief funds,and others.
China is moving from labour-intensive andfamily-based agriculture with traditionaltechniques capital and commercial- based,through increased output and capital formation. 10
GRICULTURE AND URAL EVELOPMENT
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GRICULTUREAND URAL EVELOPMENT(CONT.)
Constraints for Cambodian smallholderagriculture: low productivity, insufficientirrigation system, poor rural infrastructure,lack of research and development, difficult
access to finance and limited access tomarket information.
Cambodias government expenditure for
economic services (agriculture, industry,and services) = 8.6% (1994-2009);compared to defence (34.8%) and generalpublic services (15.4%). 11
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THE ROLEOF STATE
Two underlying roles that a 21st century government
should ensure are (Evans 2010): capacity to provide basic public goods such as
education, health, and infrastructure (road, bridge,school) and
strong and able institutions for facilitation andcoordination work.
Chinas government expenditure =14.7% to GDP,
compared to 6.6% per annum to GDP in Cambodia.
The current border conflict with Thailand will further
increase governments budget to cover militaryexpenses which means even less money for social andeconomic development activities.
Corruption remains an important issue demandingimmediate and serious solutions.
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ESSONS GROWTH ORIENTED POVERTY
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ESSONS: GROWTH-ORIENTED POVERTYREDUCTION
Agriculture continues to play a significant role in the
overall economy (i.e. job creation and incomesource for majority of rural households).
Enhancement of agricultural and food exports canbe beneficial to overall macro-economic growth and
help reduce income inequality. In the short and medium terms, removing these
constraints in agriculture should be the number onepriority for the Cambodian government.
It will not only help Cambodia diversify its economybut also contribute to poverty reduction andreduced inequality.
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LESSONS: POVERTY REDUCTION TARGETING
Cambodia should strengthen its poverty reduction
agency, the Council for Agriculture and RuralDevelopment (CARD) being the inter-ministrycoordinator on poverty reduction programmes.
CARD can be made a more specialised national
poverty reduction agency and key staff membersshould be continuously trained rather than largelyrelying on external consultants.
More resources should be allocated to building rural
physical infrastructures (roads, bridges, landimprovement, and irrigation) to allow poorhouseholds greater and easier access to marketsfor their income-generating activities.
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CONSTRAINTS
Human capital improvement remains an
important issue for CambodiaMismatch of required skills since many young
graduates are being trained
Cambodia is also lagging behind in the field of
research and development The number of researchers is very low with only
17 researchers per million people compared to1071 in China
Cambodia also faces resource constraints duepartly to corruption, insufficient revenue collectionmechanism, weak institutional arrangement andgovernance. 15
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CHINAS ROLEIN CAMBODIASDEVELOPMENT
Chinas accumulated ODA disbursement 2006-
2010 was USD455.9 million = 11% of totaldisbursement, third after Japan (15%) and ADB(12%).
Majority of Chinas ODA (76%) goes to
infrastructure building, community and socialwelfare services (12.7%) and government andadministration (7.1%).
Between 2000 and first half of 2011, China was
the top investor having 232 business investmentprojects, mainly in garments (125 projects),followed by South Korea.
Chinas investment in hydropower dams and
mineral resources have also increased.
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Source: CDCs Aid Effectiveness Report 2010; CDCs Database 2011
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PRIORITY HYDROPOWER PROJECTS BY CHINESE
FIRMSIN CAMBODIA
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Project InstalledCapacity(MW)
Annual Energy
Production
(GWh/yr.)Expected
year ofcommissionStatus
Battambang I 24 120 2010 UnknownBattambang II 36 187 2010 UnknownBattambang III 13 76 2008 UnknownKamchay 180 or 193 558 2010 ConstructKirirom III 13 70 2006 Feasibility StudySambour 467 or 3,300 2800 or 14,870 2016 Feasibility StudyStung Cheay Areng 260 1358 2015 Feasibility Study(Lower) Stung
Russey Chrum125 or 235 656 2015 Feasibility Study
(Middle) Stung
Russey Chrum120 668 2015 Unknown
(Upper) Stung
Russey Chrum32 211 2015 Unknown
Stung Atay 110 426 2010 Feasibility StudyStung Tatay 80 588 2012 ConstructLower Sre Pok II 222 1174 2018 Pre Feasibility StudyLower Sesan II 207 1065 2018 PreFeasibility Study
Source: Middleton & Sam 2008
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FURTHER COOPERATION
More support through training staff and civil
servants who work for poverty reduction institutions. Collaborate in research and exchange programmes
aimed at providing further strategies and plans forpoverty reduction.
Continue the current expenditure of Chinese ODAon transportation and infrastructure and Chineseinvestors should expand their interests in agro-business.
Consider transferring technological and managerialknow-how to Cambodian counterparts.
Commit to implement international standards inprojects to ensure cooperation for long-term growth. 18
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REFERENCES Chinas National Bureau of Statistics(1996), Statistical Yearbook
(China: Beijing)
Chinas National Bureau of Statistics(2010), Statistical Yearbook(China: Beijing)
Council for the Development of Cambodia (2010), Aid EffectivenessReport and Database, (Phnom Penh: CDC)
Dollar, David (2008), Lessons from China for Africa, World Bank PolicyResearch Working Paper No. 4531
Guimbert, Stephane (2010), Cambodia 1998-2008: An Episode of RapidGrowth, World Bank Policy Research Working Paper No. 5271,(Washington DC: World Bank)
Ianchovichina, Elena & Susanna Lundstrom (2009) What is InclusiveGrowth? PREMD,
http://siteresources.worldbank.org/INTDEBTDEPT/Resources/468980-
1218567884549/WhatIsInclusiveGrowth20081230.pdf (accessed August2011)
Kobayashi, Shintaro, Katsuhiro Saito, Hajime Tanji, Wenfeng Huang &Minoru Tada (2008), Economic Structure of Cambodia and Strategies for
Pro-Poor Growth: Results from a Computable General Equilibrium Analysis,Studies in Regional Science, 38(1), pp. 137-154
Middleton, Carl & Sam Chanthy (2008), Cambodias HydropowerDevelopment and Chinas Involvement (Phnom Penh: RCC)
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http://siteresources.worldbank.org/INTDEBTDEPT/Resources/468980-1218567884549/WhatIsInclusiveGrowth20081230.pdfhttp://siteresources.worldbank.org/INTDEBTDEPT/Resources/468980-1218567884549/WhatIsInclusiveGrowth20081230.pdfhttp://siteresources.worldbank.org/INTDEBTDEPT/Resources/468980-1218567884549/WhatIsInclusiveGrowth20081230.pdfhttp://siteresources.worldbank.org/INTDEBTDEPT/Resources/468980-1218567884549/WhatIsInclusiveGrowth20081230.pdfhttp://siteresources.worldbank.org/INTDEBTDEPT/Resources/468980-1218567884549/WhatIsInclusiveGrowth20081230.pdf8/4/2019 CAM - Roth - Presentation
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REFERENCES (CONT.) Montalvo, Jose, G. & Martin Ravallion (2010), The pattern of growth and
poverty reduction in China, Journal of Comparative Economics, 38, pp.2-16
National Institute of Statistics (2008), Statistical Yearbook 2008(PhnomPenh: MOP)
Ravallion, Martin (2009), Are There Lessons for Africa from ChinasSuccess Against Poverty? World Development, 37(2), pp. 303-313
United Nations Development Programme (2010a), The Real Wealth of
Nations: Pathways to Human Development, Human Development
Report (New York: UNDP) World Bank (2009), Poverty Profile and Trend in Cambodia: Findings
from the 2007 CSES(Phnom Penh: World Bank) World Bank (2010a), Doing Business 2011: Making a difference for
entrepreneurs, http://www.doingbusiness.org/reports/global-reports/doing-business-2011 (accessed May 2011)
World Bank (2010b), Worldwide Governance Indicators,http://info.worldbank.org/governance/wgi/index.asp (accessed June2011)
World Bank (2011), World Bank Open Data,http://databank.worldbank.org/ddp/home.do?Step=2&id=4&DisplayAggregation=N&Sdmx upported=Y&CNO=2&SET_BRANDING=YES(accessed May 2011)
World Bank (2011), World Development Indicators (Washington DC:
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http://www.doingbusiness.org/reports/global-reports/doing-business-2011http://www.doingbusiness.org/reports/global-reports/doing-business-2011http://info.worldbank.org/governance/wgi/index.asphttp://databank.worldbank.org/ddp/home.do?Step=2&id=4&DisplayAggregation=N&Sdmx%20upported=Y&CNO=2&SET_BRANDING=YEShttp://databank.worldbank.org/ddp/home.do?Step=2&id=4&DisplayAggregation=N&Sdmx%20upported=Y&CNO=2&SET_BRANDING=YEShttp://databank.worldbank.org/ddp/home.do?Step=2&id=4&DisplayAggregation=N&Sdmx%20upported=Y&CNO=2&SET_BRANDING=YEShttp://databank.worldbank.org/ddp/home.do?Step=2&id=4&DisplayAggregation=N&Sdmx%20upported=Y&CNO=2&SET_BRANDING=YEShttp://databank.worldbank.org/ddp/home.do?Step=2&id=4&DisplayAggregation=N&Sdmx%20upported=Y&CNO=2&SET_BRANDING=YEShttp://databank.worldbank.org/ddp/home.do?Step=2&id=4&DisplayAggregation=N&Sdmx%20upported=Y&CNO=2&SET_BRANDING=YEShttp://info.worldbank.org/governance/wgi/index.asphttp://www.doingbusiness.org/reports/global-reports/doing-business-2011http://www.doingbusiness.org/reports/global-reports/doing-business-2011http://www.doingbusiness.org/reports/global-reports/doing-business-2011http://www.doingbusiness.org/reports/global-reports/doing-business-2011http://www.doingbusiness.org/reports/global-reports/doing-business-2011http://www.doingbusiness.org/reports/global-reports/doing-business-2011http://www.doingbusiness.org/reports/global-reports/doing-business-20118/4/2019 CAM - Roth - Presentation
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THANKSFOR YOUR ATTENTIVELISTENING!
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