Cambodia Halved Poverty. No Blind Spot? The latest poverty assessment found that the former poor just became the near poor. The poor became the vulnerable to falling back into poverty with small shocks. It warns us, “Do not get too excited about the result”. In order to think what to do then, policy makers need to know why poverty became halved.
What were drivers of poverty reduction?
In the simulation of the World Bank, drivers of poverty reduction were the increase in rice prices (24%), rice production (23%), rural wages (16%), income from non-farm self-employment (19%), and urban salaries (4%). The price increase in rice by 37.1% boosted agrarian’s income and motivated them to increase production. According to the bank’s analysis, the major factors of poverty reduction was likely external factors.
What policies generated the poverty reducing factors?
The government policies in basic infrastructure improvement (roads, communication, rural irrigation); rice production (no price controls and no taxes), minimum wage in apparel manufacturing, and overall industrial policy helped the poor gain benefits from favourable economic environment.
Key message by the bank
The key drivers of poverty reduction are not sustainable. Increased rice price was the major cause of poverty reduction. The government could continue the above policies, while dealing with some more preventative and protective measures for the near poor.
- World Bank (2013) Where Have All The Poor Gone? Cambodia Poverty Assessment 2013.