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A woman carries her son as she begs for money at a red light on a Shanghai street in March. Reuters
A woman carries her son as she begs for money at a red light on a Shanghai street in March. REUTERS

Wanted: a level playing field

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As the countdown continues to Cambodia’s general elections scheduled for July 28, all parties – indeed all of the nation’s citizens – would benefit from a real discussion of the impact of foreign investment and development programs and policies this past decade that have helped grow the nation’s economy, but also have been perceived by some as contributing to a widening divide between the nation’s haves and the have nots, and between the connected and disconnected.

The reality remains that a significant gap exists between the richest and poorest families in Cambodia just as in numerous countries across Asia and the Pacific region. Visitors to the Kingdom may well contrast their luxury accommodations in Phnom Penh or Siem Reap with the images of rural and urban poverty that remain all too common today.

There is no denying that Cambodia today is much better off than under the murderous policies of the Khmer Rouge. Indeed, Asia today has lifted hundreds of millions out of poverty over the past few decades.

The inconvenient truth remains, however, that the vast majority of the world’s poor people still live in Asia. Stretching from the Caucusus to the distant Pacific islands, the region remains home to two-thirds of the world’s poor, and an estimated 1.7 billion people still struggle on less than $2 a day in Asia, according to the Asian Development Bank (ADB), a regional financial institution focused on poverty reduction and that has provided a range of development assistance to Cambodia.

From urban slums to impoverished rural areas, some 700 million still live on less than US$1 a day, according to the ADB.

Too often, ethnic minorities and indigenous peoples are among those who remain marginalised and excluded from the benefits of the region’s growth.

This remains the case in many parts of Southeast Asia, including in the once pariah nation of Myanmar, as well as in nations that, like Malaysia and Thailand, have succeeded by many economic measures in overcoming the Asian financial crisis of more than a decade ago.

Indeed, some 43 per cent of the Asia-Pacific region’s population still do not have access to improved sanitation facilities, and Asia’s cities, burdened by burgeoning populations, often are marked by deteriorating sanitation and environmental conditions and inadequate housing and infrastructure.

For three and one-half years, under presidents Barack Obama and George W Bush, I served on the Board of Directors of the ADB, representing the United States. Now based in Thailand, I was struck by the answers from students at Chulalongkorn University’s Sasin Graduate Institute of Business Administration, when I posed the question: “Which nation in Asia is the most ‘unequal’ when it comes to the much-discussed Gini coefficient, or index – a measure of income inequality?”

India, Vietnam and Pakistan were among the responses. How, I wonder, would Cambodia’s citizens respond to that question? Perhaps, like those Thai students, many would be surprised by how “unequal” or equal their countries are.

According to the CIA World Factbook, the widely referenced resource site, while sub-Saharan African nations top the charts as the most unequal in the world, Thailand and Hong Kong are described as the most unequal in Asia.

Cambodia is rated as the 73rd most unequal nation in the world – a relatively “good” or more equal rating. Sweden is described as having the most equal distribution of average family income. (The United States is described as the 41st most unequal nation.)

Some of these figures are startling, particularly for those who have seen first-hand the extremes of wealth and poverty in Cambodia. Indeed, the rankings underscore one of the fundamental challenges of policy.

That is, the accuracy of data. The numbers are only as good as the source data.

While Gini index calculations are often reliant on government provided data, some governments may well deem it too sensitive, or not in their interest, to provide accurate data. Cambodia’s figures are based on a 2008 estimate.

In 2012, ADB economist Juzhong Zhuang put out a thought piece noting that while some might argue that the 1960s and 1970s saw greater “growth with equity” – perhaps easier given relatively low bases – recent growth has been much more uneven.

Zhuang noted that inequality has widened in 12 of the 28 economies with comparable data, including the three most populous countries and the drivers of the region’s rapid growth, namely China, India and Indonesia.

So, does the “official” Gini index really matter in Cambodia or elsewhere? Or more importantly, as the index is really only an attempt to measure inequality, does growing inequality really matter?

For all of its success in achieving a “most equal” Gini ranking, Sweden has been rocked recently by riots, with buildings and cars set ablaze in areas characterised by some as having large numbers of young, unemployed immigrants, perhaps testimony to the reality that inequality exists everywhere.

Cambodia has seen its own recent share of unrest at factories over wages, and protests related to the environment and land use.

Whether Sweden or Cambodia, perhaps more important than official Gini coefficients, are trends and attitudes and the reality of whether or not things are unequal or getting better.

Cambodia’s economy is the third-smallest in Southeast Asia, and grew 7.2 per cent last year on higher levels of investment and consumption, according to an ADB report this April. The nation’s gross domestic product, according to the ADB, will match that rate of expansion this year due in part to increased exports of Cambodia-made garments and footwear to Europe and the United States.

Critically, Cambodia’s leaders – whether in power or in opposition – must also focus on drivers of inequality of opportunity. These may well include unequal access to public services, such as education, electricity, water and sanitation.

Certainly, Asia broadly speaking has enjoyed tremendous growth, overcoming the region’s financial crisis of the late 1990s and withstanding the ongoing global economic slowdown in good shape.

Asia is rising once again, and the world should welcome this development. Poverty has decreased and tens of millions now live better lives, but from fighting corruption to advancing human rights, much work is still to be done.

With the twin genies of technological progress and globalisation long out of the bottle, there is no putting them back in. It is now time for us to ask ourselves, why does inequality matter?

In answering that question, all of us in Asia will be better able to define who we are – as individuals, as a country and as a region.

This holds especially true today for Cambodia as its leaders, whether in the ruling party or in opposition, present their visions of a way forward for a more prosperous and peaceful, if not more equal, nation.

Curtis S Chin served as US Ambassador to the Asian Development Bank (2007-2010) under presidents George W Bush and Barack Obama. He is senior fellow and executive-in-residence at the Asian Institute of Technology, and a managing director with advisory firm RiverPeak Group, LLC.

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