The project
A. The project context
8. According to the World Bank Poverty Assessment (2006), Cambodia enjoys
relatively favourable conditions for development in terms of geographical
endowments. Its land is not particularly fertile, and the hydrological regime is
complex, but Cambodia has a deep-water port, plenty of flat cultivable terrain,
productive freshwater fisheries and a considerable stock of timber. The country‟s
most important asset is its favourable geographical position in a fast growing
region, with land borders that allow access to markets in Thailand and Vietnam.
9. Cambodia‟s poverty is primarily due to almost three decades of conflict. Civil war
began in 1970, ending in victory for the Khmer Rouge. Under their rule, population
levels fell by one fifth between 1975 and 1979. The 1980s were characterised by
Cambodia‟s slow recovery in the context of a „low intensity‟ conflict and
international isolation. The civil war has severely affected the nation‟s human
capital, destroyed infrastructure, and weakened or distorted social, economic and
political institutions.
10. Despite this background, Cambodia has, since the 1990s, experienced remarkably
rapid growth, poverty reduction and increased delivery of services. Economic
growth has contributed to significant poverty reduction. More particularly, the
national poverty prevalence was reduced from around 45-50 per cent in 1994 to 30
per cent in 2007.7 The decline in poverty during this period reflects significant
growth in real per capita household consumption (the measure of living standards
used in Cambodia). However, rapid economic growth between 2004 and 2007 has
been associated not only with falling poverty but also with rising levels of
inequality.8 In addition, the nation‟s growth has proved fragile, and vulnerable to
global economic and financial crises.