cam - roth - presentation

8/4/2019 CAM - Roth - Presentation

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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%

8


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INDUSTRIALISATION

9

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.

12

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.

13


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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.

14


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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

17

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.pdf


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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-2011


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THANKSFOR YOUR ATTENTIVELISTENING!

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