Thammasat University students interested in economics, ASEAN studies, Cambodia, political science, sociology, development studies, and related subjects may find it useful to participate in a free 14 December Zoom webinar on Structural Transformation and Inclusive Growth in Cambodia: The What, How and When.

The event, on Thursday, 14 December 2023 at 9am Bangkok time, is presented by ISEAS – Yusof Ishak Institute, Singapore.

The TU Library collection includes several books about different aspects of growth in Cambodia.

Students are invited to register at this link:

https://us06web.zoom.us/webinar/register/5617018548139/WN_bFYwNXD9RZOhfOMeUc3X7w#/registration

The event webpage notes:

About the Webinar

Cambodia has a tragic history but has recovered remarkably since the 1991 Paris Peace Agreements and continues to harbour great aspirations. It aims to become an upper middle-income country by 2030 and a high-income country by 2050. To realise these aspirations, Cambodia must address various constraints to achieve more inclusive growth that is also sustainable and resilient. This type of growth should be driven by, as well as generate, decent paying and sustainable jobs in the formal and informal sectors.

How can structural transformation deliver more inclusive growth in Cambodia? What are the key constraints to such diversification and how can they be overcome? What is required to ensure that future growth is more sustainable and resilient? The webinar will attempt to answer these and related questions. It will draw upon ongoing work for the ADB’s next Country Diagnostic Study and a Review of Cambodia Vision 2030 being led by the Cambodia Development Resource Institute (CDRI) in response to a request from former Prime Minister Hun Sen.

About the Speaker

Dr. Jayant Menon joined the ISEAS – Yusof Ishak Institute in 2020 as Senior Fellow to continue his work on trade and development in the Asian region, following a long career at the ADB. […]

About the Discussants

H.E. Dr. Sok Siphana is a Cabinet Member with the rank of Senior Minister in charge of Special Missions related to multilateral economic and trade matters in the Royal Government of Cambodia. […]

Dr. Hal Hill is the H.W. Arndt Professor Emeritus of the Southeast Asian Economies at the Crawford School, College of Asia and the Pacific, Australian National University (ANU). […]

Dr. Menon’s article on Structural Transformation for Inclusive Growth in Cambodia was posted last month on the website of ISEAS – Yusof Ishak Institute. In it, he notes:

So far, the limited amount of diversification of its economy has not affected the rapid pace of growth but only its quality and inclusiveness. Cambodia’s average growth rate exceeded 7 per cent in the decade prior to the pandemic, driven by preferential trade access to developed country markets, tourism centred on Angkor Wat, and large capital and aid inflows into infrastructure and real estate.

With its graduation from the Least Developed Country status expected this decade, Cambodia will become a victim of its own success as trade preferences and aid flows diminish. It will need to pursue new drivers of growth, which will require a new type of diversification.

The initial phase of structural transformation involving rural-urban migration from agriculture into industry and services may be reaching its limit. The horizontal shift into sectors producing higher value products and services generated a one-off increase in productivity, which raised incomes and living standards, but this increase is not sustainable.

Future increases in Cambodia’s productivity will have to come from intra-sectoral diversification. This involves the vertical shift into higher value-added products and activities within sectors. This type of diversification is sometimes referred to as moving up the value-chain. In manufacturing, it involves greater participation in global supply chains.

Cambodia must address two sets of constraints to enable greater intra-sectoral diversification for more inclusive growth. These are its limited human capital and the high cost of doing business. To ensure that the new type of growth continues, another set of constraints that limit resilience and sustainability must be addressed. The Cambodians will require policy reforms, and public as well as private investment, to address all three types of constraints.

First, there is an urgent need to improve the quality of primary and secondary schooling. Technical and vocational education and training (TVET) and tertiary education can succeed only if students have a strong foundation. The World Economic Forum’s Executive Opinion Survey ranked Cambodia at 100 out of 130 countries for primary education quality in 2017. Improvements in educational quality need to be accompanied by measures to improve access and retention rates, which are currently low.

Cambodia needs to invest in skills development and training in close collaboration with the private sector to avoid skills mismatches. TVET and tertiary education institutions need to align their curricula more closely with the needs of the private sector.

For companies, the high cost of doing business in Cambodia stems from limited physical and logistics infrastructure, and expensive energy and finance.

With widespread infrastructure deficits, there is a need to prioritise investments within the transportation sector and economy wide.

The high cost of electricity limits vertical upgrading from labour-intensive assembly activities to higher value-added but energy intensive production of parts and components in electronics and automotive supply chains. Cambodia needs to invest in renewable energy and energy efficiency to reduce costs and the reliance on diesel and heavy fuel oil in electricity generation.

The high cost of finance, especially for small-scale farmers and micro-, small, and medium enterprises (MSMEs), perpetuates poverty. Their limited access to formal avenues of finance is closely related to cost. The potential for digital innovation, including for fintech and blockchain technology, however, presents significant opportunities for Cambodia’s financial sector to enhance financial inclusion.

Finally, there is a need to increase versatility in managing and responding to shocks, and to ensure the sustainability of growth and its drivers. […]

The website of the International Monetary Fund (IMF) includes a paper, Advancing Inclusive Growth in Cambodia by Niels-Jakob H Hansen and Albe Gjonbalaj.

The abstract follows:

Abstract

We evaluate the impact of fiscal reforms on growth and inequality in Cambodia using a calibrated general equilibrium model with heterogeneous agents (Peralta-Alva et al., 2018).

Over the last two decades, Cambodia’s consumption inequality and poverty have declined. However, income inequality is higher, and large gaps remain between urban and rural residents. At the same time, domestic revenue mobilization has improved substantially, but collection of tax revenue is biased towards non-progressive sources. We use the model to evaluate the growth and inequality impact of reforms that increase infrastructure spending by raising (i) VAT, (ii) property tax, or (iii) personal income tax. We find that using property taxes delivers the largest increase in GDP and reduction in inequality. Reaping the gains from property taxation will however require additional investments in tax administration.

(All images courtesy of Wikimedia Commons)