Macroeconomical analysis of Cambodia

Table of Contents

I. Introduction

II. Cambodia, a Macro Economical Analysis
1.History
2. Background Information
a) Demographics
b) Political Structure
c) Economical Situation
3. An Economical Analysis
a) Performance over the last few years
b) Asia Crisis 1997
c) Domestic Performance in 2000
d) The Main Columns of the Cambodian Industry
e) AIDS and Other Diseases and Illnesses
f) Education

III. Conclusion
1.Finish the War Crime Tribunals
2. Political Environment
3. Economical Suggestions

I. Introduction

For my term paper fall 2001 I chose the Kingdom of Cambodia. I travelled South East Asia in 1995 and 1997, saw all the major attractions and countries of the area, but Cambodia struck me most. Its fantastic nature, friendly people and archaeological sites overwhelmed me. Cambodia lies in South East Asia and is surrounded by three countries: Thailand in the west, Vietnam in the east and Laos in the north. In the south its coastline runs along the Gulf of Thailand. Its land area is 181,035 sq km and approximately 12,1 million people live there.

As Cambodia is now about to recover from around 30 years of civil war and anarchy, many reasons of the nowadays problems can be found in the historical events. The “Killing Fields” are still in everybody’s mind as a symbol for a cruel genocide that took place under the rule of the Khmer Rouge. But Cambodia is also famous for its archaeological places, like “Ankor Wat”, the biggest temple side of the world. To explain and analyse the actual macroeconomic situation, I want to give a brief overview over the recent history of the last 60 years first.

II. Cambodia, a Macro Economical Analysis

1.History

As I mentioned already, Cambodia suffered from several internal struggles in the last decades. Due to its geographical situation Cambodia was always a target for neighbouring enemies, like Thailand or Vietnam. But real problems began with the Vietnam War, which drowned the country into years of anarchy and internal conflicts.

But Cambodia was once a strong Kingdom itself, which ruled almost all of South East Asia. In 1200 AD, Ankor the capital of the Khmer Kingdom was the biggest city on earth with more than 1 million inhabitants. Its political and spiritual influence can still be found in many areas of Asia and the buddhistic world. As I mentioned “Ankor Wat” is the biggest temple in the world with a stone volume as big as that of the “Cheops Pyramid”. The Khmer were the first people who were able to cultivate that area covered mainly by rainforest. But after the fall of the Khmer kings, the country never recovered, its temples were forgotten in the rainforest and it became a slave to one of the always changing South East Asian rulers.

It took them until 1941, to get a new king. The 18-year-old prince Norodom Sihanouk was crowned on 25th April 1941, but Cambodia was nevertheless still a protectorate of France. After several attempts to claim sovereignty during World War II, the king finally declared independency in 1953. Sihanouk was very active in the political scenes of South East Asia and that was also the reason why he abdicated in favor of his father Norodom Suramarit in 1955, to found his own party and to play an active part in the parliament. Cambodia was an uprising country in these years. Many streets and railways were built and it tripled its population in ten years. Because of its prosperous development, Phnom Penh was called the “Pearl of Asia”. But Sihanouk had never good relationships to the USA and in 1965 he even broke up diplomatic relationships. The States bombed Cambodia several times during the Vietnam War and finally backed Lon Nol, the new Prime Minister in 1970, who ousted Sihanouk when he was on an overseas trip. In May 1970 American troops invaded Cambodia from South Vietnam. As a result many supporters of Sihanouk fled into the jungle to join the upcoming Khmer Rouge in a guerrilla war. Cambodia became a republic and under the new rulers a time of suppression began.

This republic abruptly came to an end, when the Khmer Rouge seized Phnom Penh on the 17th April 1975. They chased all inhabitants out of the city to found the “Democratic Cambodia” which was based on agriculture and farming. The Khmer Rouge wanted to get rid of the whole intelligence in the country. Under Pol Pot, the leader of the Khmer Rouge, 1.7 million of the 10 million inhabitants of Cambodia got killed in 3 years. The “Killing Fields” out side of Phnom Penh got an international symbol of one of the worst genocides of human history. The capital got abandoned. 1975 Phnom Penh had 2,000,000 inhabitants. 1979 only 100,000 were left.

The cruel reign of the Khmer Rouge took an end, when Vietnamese soldiers invaded Cambodia in 1978 and chased the government into the jungle, but only to start one of the worst civil wars in history. Until 1993 Cambodia (already destroyed and looted during the Vietnam War and the Khmer Rouge regime) suffered from never ending fights. In 1991 Sihanouk returned to his country after 13 years of exile and in 1993, after several negotiations the UN run a general election, were The FUNCINPEC party (coincidentally the party of Sihanouk’s son Ranariddh) won the majority. On the 24th September 1993 the monarchy was restored with Sihanouk as the new old king.

When I visited Cambodia in 1995, the country was on its way out of the crises, but many parts of the country were still occupied by the Khmer Rouge. Corruption and anarchy were present everywhere. Just some general facts, which I read about Cambodia at this time: 10 of the 100 most wanted criminals of the world were living in Cambodia at this time; the Interpol office consisted of one fax machine and a half day employee, and one week before I came an Australian was shot of his motorbike, because he passed a red traffic light.

Nevertheless the country has obviously shown an upward trend and even though King Sihanouk is not a very pragmatic leader, Cambodia orientated itself towards the west and opened its borders to let foreign investors in. The development is slow but positive. But Cambodia is still one of the least developed countries (LDC) in the world. It’s famous for child prostitution, high HIV rates and the country is still covered with land mines, laid out in the civil war, with all its consequences. In the following chapter I’ll try to give some general information about the country and the economical situation and development in the last years.

2. Background Information

a) Demographics

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Population in millions over the next 20 years

Of the 12,1 million inhabitants around 90% are ethnic Khmer. The biggest non-Khmer group are the Vietnamese with 5%. The population is relatively young, with 50% of the people under the age of 18, and only 3% over 65. Cambodia is one of the LDC’s in the world and the demographic factors proof that dramatically. The population growth rate is 2.27% per year with an infant mortality rate of 7%. Statistically one woman gives birth to 4.82 children in a lifetime! The life expectancy rate for the total population is around 56 years. Most of the people live in rural areas; only around 15% are settled in the major urban centers of Phnom Penh and Battambang. The literacy level varies around 68%, but only 58% of all women can read and write, while 79% of all men have an according education. This reflects a typical masculine society.

If the population keeps on growing like this, Cambodia will have some serious problems in the future. But the country still has enough resources and land, to provide its people, but only if the jungle areas will be used more efficiently for agriculture. But this automatically means an exploitation of the environment.

b) Political Structure

In October 1991 the United Nations supported “Paris Peace Agreement” ended a long period of war and chaos in Cambodia. After a transitional reign of the UN for two years, first free elections were held in May 1993. A constitutional monarchy was established in Cambodia, with King Norodom Sihanouk as the head of state. Two prime ministers, who represent the two major parties, govern the country. Legislation rests in the hands of the National Assembly, which has 120 members. In 1999 a senate with 61 appointed members was established, with legislative control functions. 24 central and sectoral ministers support the two prime ministers and are elected by the National Assembly. The last elections were held in 1998 and were considered to be free and democratic.

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