Economic Structure of Cambodia and Strategies for Pro-Poor Growth: Results from a Computable General Equilibrium Analysis

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The macroeconomy of Cambodia has developed steadily since the end of the past civil war. However, the income gap between rural and urban areas is becoming wider and wider. In addition, poverty reduction is still an important issue for the country. In this paper, we estimate an input-output table and a social accounting matrix of Cambodia for the first time, and construct a computable general equilibrium (CGE) model. Based on the CGE model, we analyze the structure of the economy and discuss basic strategies for both macroeconomic growth and poverty reduction in Cambodia. Simulation results show that one cause for the income gap is a difference in growth rates between the service and fishery sectors. Therefore, protection of the environment to conserve fishery productivity is important for poverty reduction. The simulation also shows that export of agricultural and food products efficiently contributes to macroeconomic growth without an income conflict among income classes. As for financial management reforms, preferential treatment of light industries (food products and beverages, tobacco products, and textiles) is more efficient for pro-poor growth in Cambodia than price reduction of final demand goods.JEL Classification: H20, O20, O53, R20
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