Martin Godfrey compares the foreign aid given to Cambodia with that to other
developing countries, and takes a brief look at some of the problems facing the country's
provinces in terms of external assistance.
It cannot be denied that the Cambodian economy is highly dependent on foreign aid.
Total external assistance in 1998, though below levels of a few years earlier, was
worth $418 million, of which technical assistance accounted for $239 million.
Table 1 shows how these figures relate to other important economic quantities.
The most striking aspects of the table are not so much the scale of aid in relation
to Cambodia's population and GDP, as its scale in relation to other sources of foreign
exchange and to the government budget.
Total assistance is equivalent to more than 66 percent, and technical assistance
to 40 percent, of the foreign exchange earnings from domestic exports (mainly garments,
for which 1998 was a good year). Both are much bigger than earnings from exports
of services (mainly tourism, for which 1998 was a terrible year).
In fact, the foreign exchange inflows associated with aid are smaller than this,
but it can still be regarded as equivalent to one of the economy's most important
In relation to the budget, the dominance of external assistance is even more striking.
Expenditure on technical assistance alone exceeds the total tax revenue raised by
government, and exceeds non-defence expenditure by almost three-quarters.
How does cambodia compare?
Many other countries receive more aid per head than Cambodia. In 1996 (the most recent
year for which comparable data are available), Cambodia is 67th in a list of 166
countries ranked by the World Bank in order of aid per capita (Table 2).
At the top of the table are tiny island economies, with more than $1,000, and in
one case more than $2,000, in aid for each inhabitant. The $44 per head received
by Cambodia is less than that received by Israel ($389), Nicaragua ($212), Bolivia
($112), Albania ($68) and Yugoslavia ($64) and, among Asian countries, Papua New
Guinea ($87) and Laos ($72), among many others.
However, if countries are ranked by aid as a proportion of exports or as a proportion
of government revenue, the picture is very different (Table 3).
Cambodia is near the top of both lists, and is particularly high in the ranking by
aid as a percentage of government revenue. Most of these countries have suffered
a collapse in export earnings and/or in government revenue. About two-thirds of the
countries in the table are African, and more than half of the countries in the table
on one criterion are also in the table on the other.
Countries emerging from conflict of one kind or another are well represented in both
columns, while those in transition from planned to market economies have particular
problems with government revenue.
Cambodia's status as both a post-conflict and a transitional economy puts it in a
doubly difficult position. Table 3 suggests that the way to reduce this kind of dependence
on aid is not to reduce aid, but instead to increase export earnings and government
Problems facing the provinces
It is difficult to determine with any degree of accuracy the distribution of external
assistance to particular provinces. Some data are available from the Council for
the Development of Cambodia and the Cambodian Rehabilitation and Development Board
for the period 1994-96. During this period, 56 percent of external assistance was
described as being for "country-wide programmes," with no information available
about its provincial distribution.
Comparison of the remaining 44 percent which was linked to specific provinces against
provincial population distribution suggests that, overall, a disproportionate amount
of aid is received by Phnom Penh.
There is also uneven distribution between other provinces, with some (such as Sihanoukville
and Kompong Speu) appearing to receive more than their share, while others (Mondolkiri
and Kratie, for example) appear to receive much less.
This comparison should be treated with considerable caution. Some provinces in the
north and west of the country were insecure during the 1994-96 period as a result
of fighting between government and Khmer Rouge forces. It is also impossible to determine
whether some of the assistance listed as going to Phnom Penh was not being channelled
through the head office of an organisation based in the capital, which was in turn
disbursing it to other provinces. Nevertheless, it does seem as though there is a
lack of balance in the distribution of assistance across the country.
CDRI is in the middle of a research project on technical assistance and the development
of Cambodian capacity. This is not yet finished, but preliminary findings have already
revealed several problems. Many of them reflect the lack of real "ownership"
of external assistance, by either central or provincial government.
The selection of development projects tends to be donor-driven.
A list of projects is prepared for the Consultative Group meeting, but most of the
initial ideas are likely to have come from donors. The provinces could play a greater
role in this process by generating ideas for new projects, discussing them in provincial
coordinating committees (PCCs), and then sending proposals upwards for consideration
by the Consultative Group.
The role of government in the selection of technical assistance personnel in Cambodia
is small. Donors and NGOs tend to select their own experts, and at most undertake
formal consultation. Provincial government could again use PCCs to promote consultation
between government and donors on new appointments, and on the termination of contracts
of unsatisfactory experts.
There are also problems with government counterparts in technical assistance projects.
At the top, counterparts tend to be overstretched, while at the middle level they
are often missing unless salary supplementation is available. PCCs could be the place
to discuss such problems and to press for realistic supplementation, at least on
a tranisitional basis.
There tends to be pressure on technical assistance experts to "do the job"
themselves rather than to develop local capacity.
Experts write letters, speeches and reports, and often "advise" rather
than teach others how to do these things. (This is connected with the counterpart
problems already mentioned.) To address this issue, the provinces could use PCCs
to develop "codes of conduct" for technical assistance experts, with an
emphasis on capacity development.
Some projects prefer to work outside normal government structures.
Some NGOs bypass government altogether, and give no information to the provincial
government. This leaves the provinces at a disadvantage.
Provincial authorities could press central government for a national policy that
would ensure that all projects relate in some way to government structures, and use
PCCs to obtain information from all projects working in their province.
At the root of most of these problems are inadequate government budgets. This is
why government tends to accept all development projects that are offered, and why
problems arise with counterparts (due to low salaries) and with lack of ownership.
The provinces should press the Ministry of Economy and Finance to raise more revenue
and to pay adequate salaries, and use any revenue raised in the provinces for this
ï IMF (1999), International Financial Statistics (Washington DC: International Monetary
ï World Bank (1998), World Development Indicators (Washington DC World Bank)
This article first appeared in the December issue of the Cambodia Development Review,
published by the Cambodia Development Resource Institute in Phnom Penh, and is reprinted
here with the permission of the publisher. Further information about CDRI and back
issues of the Cambodia Develpment Review are available on the Institute's website
The article is based on a presentation made during a seminar for provincial governors
on development issues and conflict management, which was held from 18-22 October
1999, and draws on ongoing research work into technical assistance and the development
of Cambodian capacity. Martin Godfrey is Research Coordinator at CDRI.