No Blind Spot? Cambodia Halved Poverty

photo credit: subcomandanta via photopin cc
photo credit: subcomandanta via photopin cc

Book titles always speak of the flow of time.

Halving Poverty by 2015? In 2006, the World Bank raised the question through its poverty assessment in Cambodia. Where Have All The Poor Gone? That was the title of the bank’s latest poverty assessment in 2013. These two titles tell you the whole story that I would like to summarise here.

Only for the past eight years, Cambodia has achieved a dramatic economic growth and a consumption increase of the poor households and eventually realise halved poverty even before the year of 2015. The estimated number of poor people has dropped from 6.9 million to 3 million; and the poverty headcount ratio decreased from 53.2% to 20.5%. Inequality has also shown a considerable improvement from 0.326 to 0.282 in Gini Index.

photo credit: World Bank
photo credit: World Bank

What made it possible?

The pleasant macroeconomic condition and the pro-poor growth pattern has successfully delivered benefits to the poor. Between 2004 and 2011, Cambodia enjoyed a GDP per capita increase by 54.5 %, which is one of the highest growth rates among the world (15th out of 174 countries). Even though the rest of the world has got greatly damaged by the 2008 economic crisis, the country had a relatively smaller negative impact on the economy.

During the same period, there was consistently 37.8% increase in average per capita consumption, from 6,399 riel to 8,815 riel. The report argues that improved access to services and increased ownership of consumer goods have contributed to the dramatic consumption growth.

The growth pattern was pro-poor: the percentage increase in the poor was higher than the rich. The consumption increase of the poorest 20% was 56.5%, followed by 51.6%, 45%, 38.4% and 26.8% for the richer groups.

Where have all the poor gone?

Not that far. The poor simply just slightly got out of poverty. While the poverty headcount significantly dropped, the near poor population has gone up from 4.6 million to 8.1 million. Most households who got out of poverty can be identified just above the poverty line. It implies that a small shock of 1,200 riel (US$ 0.3) would potentially cause the poverty ratio to double.

The poverty assessment therefore calls for policies to pay greater attention to the near poor households as well as the poor.

Poverty headcount rates in Cambodia

photo credit: World Bank
photo credit: World Bank




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