Gross domestic product: US $ 24.5 billion (2018)
Income per capita: US $ 1501 (2018)
Human Development Rank (HDI): Rank 146 (out of 189, 2018)
Proportion of poverty (national poverty line): 12.9% (2018)
Distribution of income (Gini coefficient): no data
Economic Transformation Index (BTI): Rank 89 (of 137) (2020)
Development since independence
The development of the economic order of Cambodia has to be seen in the context of the history of the country. The agrarian structure of Cambodia combined with the absence of almost any kind of industrialization policy hindered the development of a sustainable economic sector. Under Prince Norodom Sihanouk (1953-1970), wet rice cultivation remained the foundation of rural subsistence farming. From 1963 some larger companies (banks, insurance companies, trading companies) were nationalized, which corresponded to the socialist ideology of the state party Sangkum Reastr Niyum. Approaches to a liberalization policy under the pro-American government of Lon Nol (1970-1975) fell victim to the country’s involvement in the Vietnam War.
The doctrine of economic autarky fanatically implemented by the Khmer Rouge under Pol Pot and the associated collectivization policy resulted in a massive decline in economic output. The consequences of the destruction of the infrastructure were extreme and continue to have an impact today. Even under the pro-Vietnamese government from 1979 onwards, the basic economic situation hardly improved; foreign trade was restricted almost exclusively to the Soviet Union and the Comecon states. After the constitutional amendment in 1989, which was also renamed ” State of Cambodia”With it, private property rights and private business start-ups were reintroduced for the first time. In addition, with the issue of land tenure deeds by June 1991, a total of 3.7 million hectares of privately owned land, representing more than 20% of the total area of Cambodia .
According to Ezinereligion.com, the Paris Peace Agreement of 1991 not only formed the basis for a comprehensive new political beginning, but also ushered in a complete upheaval in foreign trade, from a state-planned economy to a market economy, from state to private foreign trade and from east to west. The changeover to trading in hard currency in 1991 was particularly important, which initially resulted in a reorientation of Cambodian trade to the Asian markets in the immediate vicinity (especially Thailand, China / Hong Kong, Singapore and Vietnam). By joining the Association of Southeast Asian Nations (ASEAN) in 1999 and the World Trade Organization (WTO) In 2004, Cambodia finally found its way back into the regional and global market.
With a share of around 42% of the gross domestic product (GDP), the service sector was the most important branch of the economy in 2017, ahead of industry (33%) and agriculture (25%). The greatest regional competitive advantage lies in the low labor costs, which makes the country appear very attractive for labor-intensive goods and services. In addition, the economy is characterized by a low level of government regulation and poorly enforced trade supervisory authorities.
With an average per capita income of 4361 US dollars (2018, adjusted for purchasing power), Cambodia still belongs to the group of Least Developed Countries (LDC) in the UN classification. By contrast, the Kingdom by the World Bank due to the continued stable economic growth, which led to an increase in nominal GDP per capita is above the threshold of 1,025 dollars was for 1 July 2016 as a Lower Middle Income Country reclassified. It is unlikely that Cambodia will also achieve its self-imposed goal of becoming an Upper Middle Income Country by 2030.
Probably precisely because of the steady growth of seven percent annually in this decade, fundamental reforms have not been considered necessary in recent years. However, thanks to considerable trade facilitation by the European Union and ongoing donor support, Cambodia’s competitiveness is not yet completely subject to market conditions. The constant upswing is therefore taking place with significant international support, which will diminish in the near future and should then make Cambodia’s deficits even more visible. In addition to the lack of constitutional structures, a very small pool of qualified skilled workers, high energy costs and an inadequate transport infrastructure are crucial.
Local and international companies are constantly struggling with inefficient, slow and at the same time extremely corruption-prone authorities. There have been no significant changes for years, which is why Cambodia is steadily losing ground in the known comparative indices compared to other countries. Cambodia is currently performing significantly worse than its immediate neighbors Thailand and Vietnam, which are to be regarded as the main competitors, in both the Doing Business Benchmark Index 2020 and the Global Competitiveness Report 2019.
Current analyzes and data on the macroeconomic situation are not only processed by the Bertelsmann Foundation, but also, above all, by various international organizations, for example
- the world bank,
- the Asian Development Bank,
- the World Trade Organization and
- the International Monetary Fund.