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Why Has Cambodia Remained So Poor

1029 words - 5 pages


Cambodia is located in the South East Asia region, bordered by Thailand, Laos, Vietnam and the Gulf of Thailand. Currently it ranks 138 on the UNDP data set, in terms of Human Development, with a Human Development Index (HDI) of 0.543 as of 2012. According to World Bank data, around 20.5% of Cambodians live below the national poverty line, implying that at least one in five Cambodians live in destitution. The majority of the poor hail from the rural regions lacking the necessary resources to meet even their daily needs. Cambodia’s prolonged history of violence is one of the chief factors contributing to the current situation, notably, the Khmer Rouge regime, and the period of Vietnamese Communist occupation from 1980-1989. Basing my analysis of the socio-economic and political situation in Cambodia on Collier’s Theory of Poverty Traps, I will attempt to explain in this paper why Cambodia remains impoverished as a nation and as a people.

Literature Review

Collier identifies four development traps which countries in the Bottom Billion fall into and find difficult to get out of, namely: Conflict, Natural Resource, Landlocked with Bad Neighbours, and Bad Governance in a Small Country. According to Collier, these traps impede development in these countries affecting various sectors of their economy.

The Conflict Trap elucidates the plight of a country that falls victim to Civil wars and coups, incurring large economic costs. A country in civil war loses approximately 2.3% growth/annum (Collier 2007, p. 27). Civil war perpetuates a vicious circle of conflict and poverty, and the ensuing conflict results in low growth, which means low income and high unemployment. Additionally, in the time period immediately following a major conflict, relapse is highly probable, since as Collier claims, the longer a country stays in a state of conflict, the more players become entrenched in profiting from the continuing state of tumult, making the whole situation increasingly intractable.

The Natural Resource Trap explains that countries that are rich in natural resources are ironically usually worse off than countries that are not. Collier points out a variety of factors that cause this dilemma (Collier 2007, p. 38). Natural resources generate revenue, which means that governments do not have to tax its citizens, consequently reducing their financial accountability or fiscal responsibility. The preponderance of valuable natural resources can lead to over exploitation and result in the ‘Dutch disease’ (Collier 2007, p. 39), where a country's other industries become less competitive as a result of currency valuation due to the revenue raised from the resource. The rush of investment in one sector sucks attention, capital, and skills from all other parts of the economy, causing the economy to become heavily one-sided. As revenues often end up in the foreign bank accounts of the elite, it is rare profits from natural resources to reach the people.


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