Rebuilding Cambodia's economy: UNTAC and beyond

George Irvin

Research output: Working paperAcademic

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Abstract

Cambodia has a per capita income level of USD 200,1 about the same as that of Viet Nam
and Laos. But the human and infrastructural losses resulting from war and isolation make it
the poorest of the Asian centrally-planned economies attempting marketisation. Unlike Viet
Nam, communism in Cambodia produced neither land reform, infrastructure development
nor even a literate, skilled population. Two decades of war and isolation dislocated
traditional agriculture, decimated the country's middle class and left its infrastructure in
ruins. Although the Hun Sen government's reconstruction effort in the 1980s was
praiseworthy, its resources were extremely limited and it remained cut off from official
Western aid for most of the period. The Paris peace accord and the arrival of UNTAC has
brought a semblance of prosperity, but the transition to democracy envisaged by the Paris Accords is deeply flawed and economic recovery is at risk.
Below, we explore the particularly fragile nature of Cambodia's transition to a market
economy and a democratic polity. Following a brief summary of the effects of the country's
two wars in Section I, Section II sketches the logic of a stabilisation programme and the
particular institutional barriers to adjustment in the ex-centrally planned economies. In Sections III and IV, the general structure of the economy and the current state of public finance are examined in detail. Relying on UNTAC's own projections, section V sets out two
alternative post-electoral "scenarios," the second (and more likely) scenario involving
economic contraction and rising inflation. The article concludes that in the absence of well-
targeted, quick-disbursing aid, Cambodia's slide into hyperinflation cannot be checked,
leading to a further setback in the recovery process and possible political disintegration.
Since the post-electoral environment is likely to be far less stable that envisaged by the donor
community, the danger is too little of what has been pledged will be disbursed in time to
avoid such an outcome.
Original languageEnglish
Place of PublicationDen Haag
PublisherInternational Institute of Social Studies (ISS)
Number of pages32
Publication statusPublished - May 1993
Externally publishedYes

Publication series

SeriesISS working papers. General series
Number149
ISSN0921-0210

Series

  • ISS Working Paper-General Series

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