The Implication On Cambodia Economic Development

Published Date: 02 Nov 2017

Abstract

Government has played a fundamental role to safeguard the economy in this inter connected world after the lesson learn from 2008 global economic crisis (Jeffrey, 2011). The astounding economic success of East Asian such as Japan, South Korea and recently China have manifested that the government has been strong in providing public goods, performing coordination work, making sure that competition is just, and ensuring a good business climate conducive for investment. Argument of Adam Smith, a Scottish economist, government should play a minimal role in the market economy to allow market to run more efficiently seems not plausible in the modern context as proven by Chinese remarkable growth. Of course, government’s institution has performed a number of important tasks including provision of public goods, tax collection, market guidance and safeguarding, law administration, creation rule of law for the business activities and workers, work coordination, prevent market failure and monopoly which are crucial to run market efficiently. Meanwhile, government has also considered as an actor in accumulating human capital through free-education, budget planning, physical infrastructure improvement, research and development, all of which are crucial components for economic growth (Well, 2010). In this regards, this paper attempts to examine on the role of government institutionalism in formulating good policies, directing the economic strategies and utilizing aid effectively base on South Korea’s success, and apply to the Cambodia economic development context. By taking into the difference in contextual and pre requisite into consideration when replicate the economic growth, there are constraints and Cambodia could learn experiences of some best economic performance of Asian countries like India, China, South Korea, Vietnam and Thailand to further improve its poverty reduction scheme and economic performance.

Introduction

South Korea’s economic development success in East Asian regions is notable, which connote as a miracle by the World Bank two decade ago and question role of the government intervention. In this same light, the global economic and European sovereign debt crises show the necessary of states in creating a regulation mechanism to prevent the crisis occurrence and to promote growth and development. It was the breakdown of the Soviet bloc’s planned economies and the realization that institutions matter. Yet China’s remarkable growth and lift people out of poverty to 7 percent in 2007 from the onset of reform and boast to be the second largest in the world that necessitate a revision on socialist free market economy. Douglass North defines "Institutions are the humanly devised constraints that structure political, economic and social interaction" (Douglass, 1991). He also argued early on that human society created institutions to deal with information asymmetry, defection, organizational problem, reduction of transaction and production cost. Both political and economic institutions are essential for the development.

Oliver E. Williamson (2000) grouped four levels of social analysis for institutions comprising informal institutions (customs, traditions, norms, and religion); formal institutions with rules governing property rights, social order, the judiciary, and the bureaucracy; governance structures and their alignment to economize on transaction costs; and decentralized decision-making in resource allocation (the domain of neo-classical economics). According to Williamson, New Institutional Economics is primarily concerned with the economic and political ramifications of formal rules and governance structures. But, for many emerging economies, it is the embededness of informal rules, norms, and beliefs, and their slowness to change, that prevents many economies’ breakthrough to more advanced, knowledge-based growth. Francis Fukuyama’s new book The Origins of Political Order strive to address this problem. He examines the emergence of three categories of political institutions including, state, rule of law, and social accountability, the latter two constrain on the state that prevent it from becoming despotic. Fukuyama argues patrimonialism is the tendency of natural human to favor family, relatives, and friends that undermine the rule of law, accountability and good governance. At the same time, many political transition countries are always facing the patrimonial and patron client system particularly in the Asian regions. While patrimonialism may well be the main barrier to countries’ advance to middle class democracy systems, it is a key reason for authoritarian states’ fragility. It may also be a more implausible feature of some country political and economic system.

Thus, the paper attempts to give credit to government institutions in formulating policies, directing economic development and utilizing aid effectively based on the South Korea’s economic development experiences in 1960-1991. Observed experience is applied to Cambodia’s economy in the post 2008 global economic crisis. Hence, the rest of the paper is structured as follow. The second section explores on the Cambodia contemporary political economy aspect. The third piece analyzes on the role of South Korean government on economic development plans policies and initiatives links with ODA from World Bank to rebuild the war ton economy. The fourth part draws both lessons and constrains of Korea’s economic and aid story success to Cambodia economic development context. The last part will examine on Cambodia major challenges and ahead.

Cambodia Contemporary Political Economy

Cambodia is undergone a rapid change of urbanization and industrialization process, which represents a broader development of the economy, thank to the UNTAC intervention in 1993. Politically, Cambodia has dominated by Cambodia People Party (CPP) from the onset of 1993 with relative political stable and elections have taken place regularly under multi party system. Institutional building and reform internally are undertaking place with introducing of the idea of Decentralization and Deconcentration reform, Land Law and Land Management Administration reform, Legal and Judiciary, Public and Financial Management reform along the side with the creation of the Anti corruption law and unit in 2012 after the long year in draft. Since the cessation of the internal conflicts almost two decade ago and the introduction of the ‘Win Win Policy’ in 1998, the country has achieved inflow and outflow of capitals due to the relative political stability with prudent macroeconomic management and liberal economy policies. Consequently, more financial assistance has flowed in, which contributed to increasing of children schooling and poverty reduction approximately 47 to 30 percent in 2007. More than 2 million tourists now visit the country of 14 million inhabitants, a 20 fold increase in number in early 1990, which has a tremendous effect on job creation and poverty reduction rate over the last two decade. Thus, Cambodia has achieved a substantial economic growth and job creation over the last two decade after the integration into the globalization.

In this context, Cambodia’s economy depends heavily on the garment and textile products under the MFN status provided by the US and EU, account for 12 percent of 2010 GDP which are inherently main sources of Cambodia economic growth (WB, 2011). In 2008, the world has faced the unprecedented economic crisis after the collapse of the US Lehman Brother, which has negatively affected on the global economy. This crisis has spilled all over the world which was partly could be derived from the deregulation of financial sector in the major financial market in the developed countries particularly in the US and the less intervention of the government under the neo liberalism ideology from the west. Meanwhile, Cambodia is one’s of the country in the world that has tremendous impacted because of its dependent too much on external market as well as it has indicated about the Cambodia’s economy vulnerability to external shock and narrowing source of growth, which the poor situate in the rural area is mostly affected. Consequently, Cambodia GDP has contracted sharply to 0.1 which it requires the government to diversify its own economy via expansion sources of primary and secondary of growth sectors including industrial manufacturing, agricultural sector, export diversification and markets as the lesson learn from the crisis. Despites Cambodia government has made a quick recovery from the stagnated growth lately, the poverty rate has augmented to 34.7 percents which needs a stable annual growth rate around 6 to 7 percents to maintain poverty to the pre-crisis level (CDRI, 2011).

On one hand, the loosening of tax revenue collection, rampant corruption at national level, inefficient bureaucracy, poor basis infrastructure both soft and hard, human capital insufficiency, high electricity cost by comparing with the neighboring countries, low technological progress and lack coordination work among government agency have become the major developmental barriers for Cambodia to direct and to lead the economy into more sustainably progressive manner in the long run. The Transparency International, Cambodia is named as semi-democratic country and ranked 157th among 176 in the list as a corrupted nation which has constrained on the revenue collection and Foreign Direct Investment attractiveness (FDIs). On the other hand, the holistic approach to sustain Cambodia economic development rest on the, firstly, the establishment of government coordination branches, sound budget allocation, a good pubic financial management for the development area, supporting anti-poverty program through improving of the micro-finance for farmer to buy the fertilizer, irrigation system for enhancing agricultural production, vocational training for the unskilled worker to meet market job demand, good management resources more sustainably and improving intellectual Knowledge via Research and Development are the crucial components to spur Cambodia’ economic growth and people well-being under given context of ASEAN integration and inter-connectivity plans and initiative, which could be considered as the future enhancing plan and development path prospect. Regionally, Cambodia will have a major gain from the ASEAN inter-connectivity initiatives in the infrastructure domains and reap all benefits if Cambodia could remove all of the obstacles in term of human capital insufficiency, corruption problem, Research and Development lacking and governance issue as the approaching of the ASEAN Economic Community in the 2015. Roth (2012) argued that the cost of doing business in Cambodia is time consuming, complex and expensive. While company in Cambodia must complete nine required documents within 85 days and it costs 128.3 percent of income per capita to start a business, foreign company start a business in China consumes 14 days and costs 4.5 percent of per capita income. Accordingly, the business calamities and inefficient bureaucracy in Cambodia have a huge negative implication on the country business environment and informal sector of economy, which matter to economic growth.

Thus, the efficient bureaucratic and transparent government with accountability that favor meritocracies are vital substances for eliminating those economic obstacles regardless Cambodia political regime, which could have a tremendous effect on the rural people livelihood and well being for delivering promising economic growth in the future. Furthermore, it could construct a good business environment to attract FDIs and receive more ODA assistance from donor for sustaining economic growth and provide opportunity generation under the force of globalization in order to steer Camboidia into sustainable development path and become the next Tiger Economy like the South Korea in the foreseeable future.

South Korea’s Government Led Growth Policies and Initiatives in Post Korean War Era

South Korea’s has experienced a serious political and economic repercussion stemmed from the cold war rivalry between the Soviet Unions and United States. The war culminated almost three millions civilian dead and polarized the nation into two blocks which uphold difference ideology and political system despite its long historical sharing in term of culture, linguistic and ethnic unity. South Korea’s has transformed from one’s of the poorest country in the world with the GDP per capita income under 100 US dollars to become a highly industrialized country. This indicates the Korea’s government capability to allocate fund for different development initiative, this impressive growth could be derived from:

Firstly, under the Park Chun Hee’s attained strong growth under his authoritarian leadership attributed from the Rhee government initiated on Community Driven Development (Saemual Undong) and land reform tie with the sideline Korean political culture of self help and cooperation in 1950. Government has backed on the project of rural development and allocated financial resource nearly 2.5 percent of GNP per year in Saemaul Undong for the purpose of increasing physical infrastructure, agricultural productivity and human capital, which have facilitated the rural modernization and industrialization in the latter stage of development (Huck J, 2010).

Secondly, the export led growth and outward oriented development policies base on strong direct support on coordination policy between public private cooperation for the monthly promotional meeting, financed foreign training centre, exchanged the delegation for the trade exposition and shows were critical components of Korea’s economic growth. The export firms were supported by various incentive measures, subsidize, and lower raw material cost and intermediate goods for exporting firms, including favorable treatment in the allocation of credit, loans and tax exemption. The financial supporting system of Bank of Korea played a crucial role in this aspect to appraise on exporting firms by giving letter of credit for the exporter firms achievement to meet the requirement until in the mid 1980s. The government also built the Korea Trade Promotion Corporation (KOTRA) with the primary goal to explore foreign market for the exporters, associated with the subsidized projects to improve the quality of wrapping and design, expansion of the production and inspection facility for export goods. However, the package of incentive and subsidize have tied with the performance base to compete with each other and foreign business. As a result, it has created the condition for improving the competitiveness of Korea’s firms.

Thirdly, the focusing on the Heavy and Chemical Industries (HCI) was the right sequenced to transform from an agrarians economy to light manufacturing sector as a key economic sector. The advocate of building this HCI was motivated not only on the national security concerns but also to meet international market standard. The HCI (Conglomerates) was the priority industry of Korea’s government economy and require a massive capital, it has received special subsidize and tax, selective protection, entry restrictions and direct government involvement in industrial decision making. Constrained by the lack of hard and human capital, Korea’s government has provided a huge commercial loan accounted for 73.8 for HCI related project and pushed the government to normalize with Japan for attracting the capital and technology although the anti-Japanese sentiment still at the spike rate. Moreover, the government has also devised on National Investment Fund (NDF) and provided plant training and public training in order to secure skilled workers and engineers for HCI through training centre, high school training and Engineer College along with the demand on the private sector firms to supply for the HCI field. Consequently, the number of in plant vocational trainees drastically increased in 1976, reaching an annual level of approximately 100,000. Large numbers of workers continued to be trained from 1977 to 1980, averaging about 70,000 annually. Meanwhile, the government also imposed the skill licensing and certification system under Training Vocational Act in 1965, which necessitated for the people to obtain one skill at least. Moreover, the government has collaborated with the foreign researcher and university professor to select the outstanding of Korean scientist abroad to conduct the modern laboratory to increase the production technology. On the top of that, there was a complementary policy on the risk sharing between the government and private sectors which led to the entrepreneurship to explore the risky opportunity in the Korea long term profitability. Nevertheless, this has attributed to the moral hazard problem as the over protection on the private sectors in the economy. In the latter stage of the Korea’s development, economic growth has been turnout to focus on Small and Medium Enterprise (Joon.K, Sang D, Jun Il, 1995).

Last but not least, the remarkable growth of Korea’s from an empty hand and cheap labor base to heavy manufacture stage rested on the government has well articulated policy and national development strategy in line with the financial assistance from World Bank loans/credit sand grant in educational investment coupled with policies on the expansion of the secondary education with technical orientation in 1962-1979 and higher education since 1975. As a result of the educational developmental policies, exports increased tat 40 percents per year, and per capita income augmented from US 87 dollars to 320 during the first and second five year plan period (1962-1971). Because of expansion and training polices, it have produced a direct effect on employment structure among the primary employment industry diminished from 63 to 50 percent whereas the share of the secondary employment industry increased from 7.5 to 14 percents. On the other hand, the labor structure employed in the light industry has shifted to the heavy chemical industry with the figure between the two; 33:67 in the 1960s to 39:61 to 49-51 in the 1980s. Additionally, South Korea’s government has played a pro active role to specify the key sectors and good execution and it has also coordinated well with the donor partners under the appropriate sequence, analysis framework and right policy direction. The World Bank financial assistance mainly focuses on, at first, to foster the middle level skilled and technical workers through the expansion of workshops improvement of instructors’. In the latter of the third and fourth loans, World Bank loans to support on skilled workers and instructor through works shops enhancement scheme and laboratories for public non formal occupational training institution. Interestingly, the amount of per capita investment in education in terms of education sector loans and credits from the World Bank in Korea ($4.83) was never higher than that in other comparable developing countries ($5.84). The percentage of per capita loans/credits for all sectors in Korea (6.8) was lower than any other comparable developing countries (10.2%) (Kye, 2010).

Hence, South Korea’s development experience indicates that government role to spearhead on soft and hard infrastructure upgrading and industrialization. In addition, Park regime could characterize as an ‘authoritarian development’ base because of strong growth and socio development in the Korea’s. Of course, there are many pitfalls on the government intervention policy which negatively effect on the economic during that period. However, the story of aid in Korea’s is astonishing story because of aid is well utilized, well coordinated and well align with the national development strategy plans in local country combining with the pro active role and critical analysis of the government. Yet whether economic development leads to democracy or not, South Korea’s democracy progress is base on the authoritarian development path that resulted in the rise of the middle class and civil society organization insurrection and non violence movement against the authoritarian regime, in a certain extent.

Lessons and Constrains: Korea’s economic and aid story success to Cambodia Economic Development

As shown, South Korea’s economic development experiences have a number of distinct features: government-led development, effectiveness policies, well utilized aid efficiently, and appropriate sequencing that modernized village infrastructure, promote export oriented growth, increase agricultural productivities, focus labor intensive and moved to centre on the light industrialization, Heavy Chemical Industry alongside the human capital accumulation through World Bank loans/credits and grant with government pro-active policy, good coordination and enforcement work and key sector analysis.

Cambodia government can draw lessons from South Korea’s economic development experience by implementing a strong execution on the existing land law and administration and management of land as land is the only property that rural people livelihood heavily depend on because of 80 percent of Cambodian people engage in agricultural related occupation and it is an income generation for their survival in the short and medium term. As the rural poverty incident accounted for 34.7 percent and agriculture still shared 39 percent of GDP and 70.3 percent of total employment over the period 1993-2009 (CDRI, 2011). Aside from this, Cambodia can learn in the area of industrialization focus on light manufacture, modernize priority rural area, urbane rural linkages, and soft and hard infrastructure upgrading. In term of institutional policy front, incentive policy, reward framework and tax exemption to specific firms that posses the highest capability and positive impact to the economy in order to be more competitive and creative. As a result, of the selective in intervention in the past and ability of South Korea’s government to utilize aid with effectiveness and efficiency in the upgrade soft and hard infrastructure, it has become not only a marker of the Samsung and LG electronics products but has also transformed itself from aid recipient to aid donor country.

Obviously, an each cent government budget spending and public services delivery remains come from official development assistance (ODA). From 2001 to 2007, Cambodia government has received 7 billion dollars from bilateral and multilateral aid. In 2009, external aid accounted for 55 percent of government budget and 90 percent of resources available for financing capital expenditures. Aid flows to Cambodia continued to increase despite the global economic storm on donor countries from USD955 million in 2008 to USD990 million in 2009 and project for 2010 with the figure of USD1.1 billion (CDC, 2010). But the problems of the corruption and patron client system in Cambodia have obstructed the flow aid to benefits directly to the poor in rural area, which major aid projects remain centre in the urbane rather than on rural area. As a result, it has created asymmetric development and economic inequality between rural and urban (centre and periphery) which have pushed and pulled the rural young adults who age between 19-24.5 years to migrate to work at the construction and garment sectors in the city due to the persistence poverty, debt, unemployment, landlessness, complement with better employment and better wage opportunity luring (CDRI, 2007).

Thus, the government should utilize the aid more effectively and efficiently to invest more physical infrastructure upgrading, college technical training and rural managerial skills centre in order to bear the benefits to rural farmers and produce skilled labor forces in urbane to improve the light manufacturing in Cambodia firms need and to be more competitive in this knowledge base growth. However, major constrains in term of historical context, geographical endowment, pre requisite conditions and time appropriateness are require to take into account when replicate the Korea’s experiences.

Major Challenges ahead: Poor Governance and Resource Mismanagement

Although Cambodia has achieved the impressive economic development, poverty reduction and improved living standard of the people, the country still faces two major challenges to realize its longer term aspiration. They include following:

Poor governance: Poor governance is a trap in Cambodia democratic progress accompanied by the social injustice, inequality and public unaccountability. Despite a major political reform is undertaking place, the quality of the governance progress is at the slim rat with the inefficient of bureaucrats. According to Transparency International, the Corruption Perception Index (CPI) in 2012, Cambodia ranked 157th among 174 countries with the score of 22 out of 100, a slight improvement in the list as a corrupted nation, which has constrained on the revenue collection and Foreign Direct Investment (FDIs) attractiveness [1] . The abuse of power from the local elite over the poor is apparently normal in the country as the politically well connected with the government official holding tightening relation in the public sphere because of politicization bureaucracy and judicial system, which pictured as a patron client system under the current ruling party of Cambodia People Party (CPP). As a result, it has undermined social equity, rule of law, state institution and enforcement. Currently, the formal justice system is virtually inaccessible to ordinary Cambodians and public faith in the institution is extremely low. In 2007, the Cambodian public ranked the judiciary as the most corrupt sector [2] . Judges are not independent and judgments will often be swayed on the basis of the relative wealth and power of the parties involved. Official or those linked to officials are not held accountable for crimes or acts of corruption. The incidence of the Boeng Kak Lack land eviction, where 4235 families settlement provide the pertinent example out of many problems, which the underprivileged and poor people lost the legal battle over the land right, and thereby indicates the judiciary system is toxic under the current system due to the influence of the privilege and political well connected people in the country (Sokbunthoeun, 2010).

The civil space openness and social accountability is low in Cambodia. Civil liberty and freedom of expression is under threat after long year of opposition silence. The opposition parties and human right activists have been threatened and jailed by the ruling party through the corrupted court because of the anti-government charge and government has being immune from the public criticism. It is a kind of indirect repression as the country has not fully achieved the democratic society although the government has elected from the people. The problem of vote buying and political gift is the pressing concern in the upcoming election, which still influences on behaviors of rural poor voter, which most of them are uneducated and fear of the government official. Meanwhile, the problem of distribution of economic growth pie is uneven which lead to widening the inequality gap. Thus, the poor governance trap under the current system of patron client and patrimonial is ones of the greatest challenges of Cambodia, which will directly impact on state intuitions, socio economic development and quality of governance in the foreseeable future.

Resource Mismanagement: Cambodia is in the midst of serious resources conflict in the recent year. The conflicts of land dispute including agricultural and forestry land pit poor farmer and forest dependent communities against the politically connected private actors, the military and state agencies, which poses a grave problem on improving the resource governance aspect. Overlaps in the areas designated for economic land concessions, mining concessions, community managed forest areas, and smallholder agricultural land are fueling renewed local resistance, protest, and conflict. According to press reports, the government has recently made new commitments to foreign governments and investors for large tracts of agricultural land that appear in excess of the total available land area. Community organizers and civil society groups that have mobilized to defend resource rights for local users have consistently failed to achieve resolution through the courts and describe an atmosphere of impunity and systematic bias against poor resource users, indigenous groups, and other local communities (IPNN 2010; Ratner and Parnell 2011).

In the fisheries sector, likewise, deforestation and what is referred to locally as ‘land grabbing’ have been rampant. The local dailies abound with reports of land being awarded to the political well connected and powerful in the nominal amount, and a startling but detailed account is presented in the 2008 study by Global Witness entitled ‘Country for Sale’. Despite a dramatic policy shift that reduced the area of commercial concessions in favor of community access in 2000/2001, conflicts between commercial and subsistence fishers persist, along with a new set of challenges that include competing uses of water and land in the floodplain zone, and the potential impact of new infrastructure, particularly dams (So et al., 2010). No systematic framework is in place to assess the cumulative environmental and social impacts of new projects, including hydroelectric power projects, irrigation schemes, and mining operations, nor to weigh these objectively against the expected benefits. Environmental and social impact assessment procedures have tended to disregard cumulative impacts on environmental services such as maintenance of fisheries habitat and migration routes through riverine and floodplain connectivity, as well as the social and economic implications for communities beyond the immediate project area (Nguyen-Khoa and Puthy, 2006). The Royal Government’s Rectangular Strategy places good governance at its core, and highlights the agricultural sector (including forestry and fisheries) as the first among four "strategic growth rectangles" requiring priority support (RGC, 2008). This is entirely sound, and provides an appropriate reference point for dialogue about strategic policy options for the future. Yet, even with such overall policy direction in place, the poor execution and the personalized bureaucracy and politicized judiciary system have undermined the resources management system, rule of law and horizontal accountability of government to grassroots people level. The recent youth brigade has showed the commitment of Royal Government to land Management and administrative reform but it is not clear whether it will produce the fruitful result and desirable outcome for the poor or not. Thus, the natural resource mismanagement is a trap that could potential induce political instability and economic decline if it is not dealing properly.

Conclusion

The US massive financial assistance to South Korea’s has enabled the government started in an impoverished state to lay the foundation of rehabilitating and rebuilding projects on socio economic sectors and physical infrastructure after the end of Korean War in 1953. Consequently, South Korea’s government has become a significant player in many sectors in its first stage of two Five Year Development Plans base on agrarian economy in rural and labor intensive to light and heavy industrialization centre in latter stage, through government pro active policy and commitment gradually, couple with good internal policies and reward framework linked with a good vision on export led development, financial resources support on exporter, monthly promotional export meeting, educational investment expansion and public and private training policies.

As shown, South Korea economic miracle is an exceptional story that the World Bank unwilling to accept the government role in economy. In the World Bank published about the East Asian Miracle argues, where selective interventions succeeded, they did so because of the essential pre conditions. Firstly, they addressed problems in the functioning of markets. Secondly, they took place within the context of good and fundamental policies. Thirdly, their successes depend on the government capability to establish and monitor appropriate economic criteria related to the intervention with the terms to create economic contests. These pre conditions suggest that the institutional context within which policies are implemented, are crucial to their success and failure.

In this context, Cambodia can utilize the financial assistance effectively and efficiently by drawing lessons from South Korea’s development experiences about the selective interventions and policies. On the economic front, Cambodia can learn in the area of industrialization focus on light manufacture, modernize rural area, urbane rural linkages, managerial and training skilled, soft and hard infrastructure upgrading which could provide the tangible value to economy and poverty reduction. In term of institutional policy front, incentive policy and reward framework to specific firms that posses the highest capability base on the performance criteria is crucial in order to established competitive products to export at the global market. Accordingly, the selective of intervention in priority sectors in the past and ability of South Korea’s government to utilize aid effectively and efficiently has transformed Korea’s not only a marker of the Samsung an LG electronics products and micro conductor supply factory but also change its image from aid recipient to aid donor country.

Interestingly, South Korea’s has also changed its image in international arena not only in the United Nations peace keeping operations and humanitarian assistance but it also in global market and financial assistance to the developing country today’s. In somehow, South Korea’s impressive growth is exceptional story for drawing lessons to Cambodia due to the difference in history, geography, political culture and political system. From the geo political perspective, both South Korea and Cambodia have gone through the catastrophic effect of the cold war rivalry between the former Soviet Unions and United States from the empty hand to the present economic status. But Cambodia was more fragile than South Korea due to the protracted civil war, sporadic violence and political instability before 1998. Of course, whether the economic development will lead to democracy or not, Cambodia still has the great opportunity to catch up the developed country like South Korea’s in the foreseeable future as the recent discovering of the off shore oil and gas could improve not only socio economic development but also rural infrastructure. However, as Cambodia is on the wrong track of development and unsustainable pattern, resource curse thesis need to be revised because of the serious issues such as patrimonial and patron client system base development, which possibly have undermined social equity, accountability, rule of law and democracy advancement currently and future ahead.