Silviase/jgov_v1.4_full_ann huggingface dataset:
## 7 -4 Macroeconomy

Economic data before 1989, when economic reform started, are scarce. The government did not emphasize an improved economy because of the continuing civil war since the end of 1970s. Therefore, we cannot conclude that the economy had operated smoothly.

After 1989, judging from macroeconomic data (as there are differences according to the source), the agriculture and service sectors have been rehabilitating satisfactorily. We think that this phenomenon was brought about by the political stability and effect of UNTAC, though the economic reforms had an effect as well.

However, hyper-inflation (171.5 percent in 1991) and fiscal deficits (about 40 percent of annual expenditures in 1991 were money creation) are the most important problems, so the administration has to introduce a policy for macroeconomic stability immediately.

## 7 -5 Fiscal Reform

The government began the fiscal reform to correct hyper-inflation and fiscal deficits. Since late 1992, the administration and UNTAC have tried some measures aimed at stabilizing the economy. As the fiscal deficits caused hyper-inflation, they arranged a system of imported tariffs and introduced a 10 percent tax on hotel fees to broaden the budget revenue.

As for government expenditures, they organized a system in which UNTAC supervised the outlay of the government, and the auditors of accounts were posted at the main ministries and agencies.

After the withdrawal of UNTAC, the state decided to impose a tax on people in the upper income brackets, and will introduce 25 percent tax on corporate profit in the near future. Additionally, they are trying to restrain expenditures, as the average monthly salaries of about 290,000 public servants and soldiers have not exceeded 40,000 riel (about 15 dollars).

If the fiscal reform is improved satisfactorily, hyper-inflation will come under control. This reform has just started recently, so institutions are still in need of restructure. They need to create a modern system of taxes to rebuild finance.

## 7 -6 Closing Remarks

Cambodia has begun to break out from the socialist-type economy to that of a market economy. As the government has tried to substitute institutions to suit to the new system, these are still far from complete. The market economy of Cambodia has not operated fully yet. The government of Cambodia has undertaken economic reforms only recently, and at present it is premature to evaluate the transition to a market economy. The administration has to persevere for several years until the market economy operates functionally.

To make the economic rehabilitation of Cambodia a success, the following are needed:

## (1) Political Stabilization

The achievement of political stabilization has to be given the highest priority for the rehabilitation of Cambodia's economy. They have to end the civil-war as soon as possible. They have to build up the system so that the government can devote its attention to the rehabilitation of the economy.

## (2) Fiscal Reform for Macroeconomic Stabilization

Considering the situation that the government has not solved its continuing civil war
against the Pol Pot regime, it is difficult for Cambodia to achieve the political stabilization alone. They have to strive for economic stabilization along with political stabilization. As for the economic stabilization, it is very important to stabilize the macroeconomy. Since 1992, the administration has embarked on fiscal reform - the most crucial problem in Cambodia, aimed at the stabilization of the macroeconomy. However, inflation is not yet under control, and fiscal reform is also incomplete so far. They have to implement fiscal reform more thoroughly.

## (3) Development of Infrastructure

As we mentioned above, the electric power system of Cambodia is one of the least developed in the world. Most infrastructure like roads, ports and communications has not yet developed. These have arrested the growth of Cambodia's economy. The administration has to build on infrastructure to stimulate the development of the private sector. They also have to develop soft-infrastructure concurrently with hard-infrastructure.

Cambodia has a peculiar feature, which is different from other socialist countries: control by a communism party was not firmly established. Centralization, which is one of the largest obstacles to the introduction of a market economy, has not spread nationwide. This imperfection of centralization may actually help the process of economic rehabilitation of Cambodia.

(Uchikawa)
## FOOTNOTES

1/ AMAKAWA, [1990, p.80]

2/ IMAGAWA, [1985, p.211]

3/ TAKESHITA, [1986, p.202], KIMURA, [1987, p.232]

4/ TAKESHITA, [1986, p.228]

5/ TAKESHITA, [1986, p.202]

6/ KIMURA, [1990, p.268]

7/ The Economist Intelligence Unit, [1988, p.27]

8/ KIMURA, [1987, p.232]

9/ KIMURA, [1989, p.263]

10/ The World Bank, [1992, p.17]

11/ The World Bank, [1992]

12/ The World Bank, [1992]

13/ Mr. Tuon THAVRAK, Bureau Chief of General Planning Department, Ministry of Planning of Cambodia (Economic Report on Cambodia) [1993] p.11

14/ Chhieng YANARA, Director of General Planning Department, Ministry of Planning of Cambodia (Reform of Macroeconomic Policy) [May 1993] p.11

15/ The Economist Intelligence Unit, [1991, p.72]

16/ The Economist Intelligence Unit, [1991, p.72]

17/ Government of Cambodia, [1992a]

18/ YANARA, [1993, p.5]

19/ Asian Development Bank, [1993, p.259]

20/ Government of Cambodia, [1991a, p.3-4,22], [1991b]

21/ Asian Development Bank, International Monetary Fund, United Nations Development Programme, The World Bank, [1992, p.11]

22/ AMAKAWA, [1991a, p.257]

23/ United Nations Transitional Authority In Cambodia (UNTAC), [1992b, p.24]

24/ YANARA, [1993, p.13]

25/ AMAKAWA, [1991a, p.257]

26/ TOMIYAMA, [1993, p.231]

27/ Nihon Keizai Shinbunsha, [1994.3.7]

28/ Mainichi Shinbun [1992.9.3], Yomiuri Shinbun [1992.9.17]

29/ United Nations Transitional Authority In Cambodia (UNTAC), [1992a]

30/ KIMURA, [1988, p.259]
## REFERENCES

AMAKAWA, Naoko, Institute of Developing Economies “Cambodia, Laos” Asia Doko Nenpo 1991 1991a p.251-284

------, Institute of Developing Economies “Cambodia” Asia Doko Nenpo 1992 1992 p.233-248

------, Institute of Developing Economies “The Composition of Cambodia’s Dispute”

Asia Trend 1990-IV 1990 pp.79-89

------, Institute of Developing Economies “Activated Supreme National Council of Cambodia” Asia Trend 1991-III 1991b pp.12-18

Asian Development Bank, International Monetary Fund, United Nations Development Programme and World Bank, Cambodia Short-Term Needs August, 1993

Programme and World Bank, Cambodia Short-Term Needs August, 1993

------, Cambodia Socio-Economic Situation and Immediate Needs May, 1992

Chhieng Yanara, “Reform of Macroeconomic Policy in Cambodia” Working Paper No. 21, Economic Planning Agency May, 1993

Government of Cambodia, Implementation Situation of the Socia-Economic Rehabilitation and Development Programme 1991a

------, Programme of Action of the Provisional National Government for the Coming Three Months September, 1993

------, 1992 State Plan Report on Socio-Economic Development in 1991 and 1992 Plan 1991b

IMAGAWA, Eiichi, Institute of Developing Economies “Indochina” Asia Middle East

Doko Nenpo 1985 1985 p.208-211, p.205-230

KIMURA, Tetsusaburo and TAKEUCHI, Ikuo, Institute of Developing Economies "Indochina" Asia Doko Nenpo 1981 1981 P.203-252

KIMURA, Tetsusaburo, Institute of Developing Economies “Cambodia, Laos” Asia Middle East Doko Nenpo 1987 1987 p.229-254

------, Institute of Developing Economies “Cambodia, Laos” Asia Doko Nenpo 1988 p.257-282

------, Institute of Developing Economies “Cambodia, Laos” Asia Doko Nenpo 1989 p.259-282

------, Institute of Developing Economies “Cambodia, Laos” Asia Doko Nenpo 1990 p.265-286

Mainichi Shinbun September 3, 1992

Naranhkiri Tith, Ph.D, Reconstruction and Future Development of the Industrialization of Cambodia : Strategy and Policy October 29, 1991

-----, October 8, 1985

-----, January 6, 8, 1986

-----, March 7, 1994

Rengo-Shuppan Cambodia Gendaishi November 30, 1992

Siek Ly Heang “Current Situation and Respect for Future Economic Development”
Country Report presented in Seminar on Economic Development Policies, Japan International Cooperation Agency 1993

TAKESHITA, Hidekuni Institute of Developing Economies “Indochina” Asia Middle East

Doko Nenpo 1986 1986 p.195-254

The Economist Intelligence Unit “Cambodia” Indochina : Vietnam, Laos, Cambodia 1989-90 1989 p.47-61

------, Profile Indochina : Vietnam, Laos, Cambodia Profile 1991-92 1991 p.59-72

The Economist Intelligence Unit, “Cambodia” Indochina : Vietnam, Laos, Cambodia Country Report No.4 1988 1988 p.22-28

The World Bank, Cambodia Agenda for Rehabilitation and Reconstruction June, 1992

TOMIYAMA, Yasushi, Institute of Developing Economies “Cambodia” Asia Doko Nenpo

1993 1993 p.223-236

Yomiuri shinbun September 17, 1992

Tuon Thavrak, “Economic Reform on Cambodia” Country Report presented in Seminar on Transition to a Market Economy 1993

United Nations Transitional Authority In Cambodia (UNTAC), Impact of UNTAC on Cambodia's Economy December 21 1992a

------, The Secretary-General's Consolidated Appeal for Cambodia's Immediate Needs and National Rehabilitation May 1992b
Table 2-1-1 The Economic Reform Chronology of Cambodia

Price	Public Finance	Financing	Enterprises	Agriculture	Exchange	Trade / Investment
1983
1984	Introduction of Agricultural Taxes
1985	Taxation on Domestic Products, the Licenses of Occupations and Enterprises	Dismantling of Collective Management by Introduction of the First-Five-Year Plan
1986
1987
1988	Attaching Importance to Management of Joint Venture of Official and Private, Collectivization and Family	Trade: from National Monopoly to Under Supervision and administration by government
1989	Beginning of Price Liberalization	Beginning of the Reform of the Banking System	Introduction of the Policy of Financial Autonomy of SOEs Beginning of Leasing and Selling of SOEs	Privatization of Land	Introduction of Foreign Investment Law
1990
1991
1992	Achievement of Price Liberalization for Agricultural Products	Taxation on Hotel Fees (10%) The Arrangement of Import Tariffs	Abolition of Land Tax
1993
1994	Introduction of Income Tax on individuals who earn more than $300 per month
Table 2-1-2 Sectoral Share of GDP in Cambodia

Share of GDP	1988	1989	1990	1991	1992	1993
Real GDP	%	100	100	100	100	100	100
Agriculture	%	50.5	52.2	52.3	51.8	49.4	48.2
Rice	%	21.2	20.4	18.2	16.6
Rubber	%	11.3	10	12.1	11.5
Forestry	%	2.5	2.8	3.3	3.5
Industry	%	15.7	15.4	14.9	15.1	16.3	17
Manufacturing	%	7.5	7.1	7	6.8
Electricity and Water	%	0.2	0.2	0.2	0.2
Construction	%	6.6	6.5	6.7	8.2
Services Growth Rate	%	33.9	32.3	32.8	33.1	34.4	34.8
Transport and Communications	%	2.7	2.6	2.7	2.9
Wholesale and Retail Trade	%	13	12.5	13.1	14.2
Hotels and Restaurants	%	0.2	0.3	0.4	0.5

Source: Asian Development Outlook 1993 Appendix Tables, Asian Development Bank World Bank

Note: Date for 1993 are Preliminae.

Table 2-1-3 Growth Rate of Economic Indicators in Cambodia

Growth Rate	1988	1989	1990	1991	1992	1993
Real GDP	%	9.8	3.5	1.2	7.6	7	5.7
Agriculture	%	5.9	7.1	1.2	6.7	1.9	3.2
Rice	%	5	-2.8	-4	-2
Rubber	%	14.4	-10.1	30	2
Forestry	%	-20	14.7	24.9	15
Industry	%	15	1.7	-2.1	8.9	15.6	10
Manufacturing	%	13.9	-4.3	6.8	3
Electricity and Water	%	-2	-9.8	-13.7	34.9
Construction	%	-10	-1.3	11.7	30
Services	%	13.6	-1.1	2.7	8.5	11.1	7.2
Transport and Communications	%	-0.1	-1.4	9.2	15
Wholesale and Retail Trade	%	5	2.4	12.8	16
Hotels and Restaurants	%	51.5	83.5	35.7	30

Source: Asian Development Outlook 1993 Appendix Tables, Asian Development Bank World Bank

Note: Date for 1993 are Preliminary.
Table 2-1-4 Direction of Trade

Unit (000)	1980	1985	1986	1987	1988	1989	1990
A. EXPORTS OF GOODS
I. Non Convertible Area	Rubles	855.5	15268.9	18431.8	22476.9	20967.5	26836.6	20112.2
USSR	Rubles	855.5	7856.8	10400.1	13306.0	11321.8	14291.3	13882.0
Germany, D.R	Rubles	0.0	1303.8	1061.2	1257.5	1618.7	2763.9	217.0
Czechoslovakia	Rubles	0.0	1908.7	1135.7	1570.0	1561.3	1801.7	1741.5
Poland	Rubles	0.0	810.8	1.5	646.1	647.8	729.2	678.8
Bulgaria	Rubles	0.0	1463.5	919.4	1200.0	1017.9	1177.6	61.8
Hungary	Rubles	0.0	129.3	1409.1	824.2	1193.4	1105.0	326.6
Cuba	Rubles	0.0	0.0	0.0	0.0	327.8	465.4	0.0
Vietnam	Rubles	0.0	1458.9	3308.5	3048.6	2959.8	4029.2	3071.4
Laos	Rubles	0.0	337.1	196.3	624.5	319.0	473.3	133.1
II. Convertible Area	US$	150.5	2453.2	6871.6	4667.4	11522.4	17412.9	14616.0

### B. IMPORTS OF GOODS

I. Non Convertible Area	Rubles	0.0	92141.9	109159.0	112880.9	110323.2	110861.8	103330.0
USSR	Rubles	--	81455.7	99861.3	102450.3	99695.4	99365.4	93494.6
Germany, D.R	Rubles	--	800.4	1065.9	1468.3	1370.9	2524.7	1980.7
Czechoslovakia	Rubles	--	4284.9	1248.2	903.9	1107.4	1427.0	483.8
Poland	Rubles	--	501.7	256.2	428.4	596.0	1070.2	347.0
Bulgaria	Rubles	--	98.0	2144.5	1784.2	2013.8	1192.4	1161.4
Hungary	Rubles	--	807.2	1127.1	1200.3	1330.8	1286.3	1283.0
Cuba	Rubles	--	0.0	0.0	0.0	571.5	303.1	0.0
Vietnam	Rubles	--	3494.0	2621.6	4167.9	3637.4	3424.6	4260.6
Laos	Rubles	--	700.0	834.2	477.6	0.0	268.1	318.9
II. Convertible Area	US$	1330.0	4093.3	10242.9	7375.9	16575.7	24079.7	12022.8

I. Non Convertible Area	Rubles	855.5	-76873.0	-90727.2	-90404.0	-89355.7	-84025.2	-83217.8
USSR	Rubles	855.5	-73598.9	-89461.2	-89144.3	-88373.6	-85074.1	-79612.6
Germany, P.D.R	Rubles	0.0	503.4	-4.7	-210.8	247.8	239.2	-1763.7
Czechoslovakia	Rubles	0.0	-2376.2	-112.5	666.1	453.9	374.7	1257.7
Poland	Rubles	0.0	309.1	-254.7	217.7	51.8	-341.0	331.8
Bulgaria	Rubles	0.0	1365.5	-1225.1	-584.2	-995.9	-14.8	-1099.6
Hungary	Rubles	0.0	-677.9	282.0	-376.1	-137.4	-181.3	-956.4
Cuba	Rubles	0.0	0.0	0.0	0.0	-243.7	162.3	0.0
Vietnam	Rubles	0.0	-2035.1	686.9	-1119.3	-677.6	604.6	-1189.2
Laos	Rubles	0.0	-362.9	-637.9	146.9	319.0	205.2	-185.8
II. Convertible Area	US$	-1179.5	-1640.1	-3371.3	-2708.5	-5053.3	-6666.8	2593.2

Source: Ministry of Planning, Department of Statistics.
Table 2-1-5 Key Macroeconomic Indicators of Cambodia by Government of Cambodia

unit	1988	1989	1990	1991	1992	1993
Real GDP Growth Rate	%	16.2	2.4	-0.1	13.5
Agriculture Growth Rate	%	-0.6	6.6	-0.9	17.2
Share of GDP	%	44	45.8	45.4	46.9
Industry Growth Rate	%	29	0.9	-2.4	8.6
Share of GDP	%	16.9	16.7	16.3	15.6
Services Growth Rate	%	36	-1.7	1.9	11.1
Share of GDP	%	39.1	37.5	38.3	37.5
Balance of Trade	$ million	-82.9	-90.7	-80.6	-180	-290
Merchandise Imports	$ million	126.9	135	115.3	243	360
Growth Rate	%	5.4	6.4	-14.6	110.8	48.1
Merchandise Exports	$ million	44	44.2	34.7	63	70
Growth Rate	%	61.8	0.5	-21.5	81.6	11.1
Overall Budget Surplus/Deficit of Central Government	Riel million	-1840	-7850
Changes in Money Supply	%	81.8	150.1	47.4
Official Exchange Rate	Riel/\$	148	268	537	818	1520	2800

Source: Department of Statistics and World Bank estimates

Department of Trade

Ministry of Commerce

Ministry of Finance

National Bank of Cambodia

Provisional estimates

Note: Date for 1993 are estimates.
Table 2-1-6 Key Macroeconomic Indicators of Cambodia by International Organizations

unit	1988	1989	1990	1991	1992	1993
Real GDP Growth Rate	%	9.8	3.5	1.2	7.6	7	5.7
Agriculture Growth Rate	%	5.9	7.1	1.2	6.7	1.9	3.2
Industry Growth Rate	%	15	1.7	-2.1	8.9	15.6	10
Services Growth Rate	%	13.6	-1.1	2.7	8.5	11.1	7.2
Gross Domestic Saving	%	1.7	3.8	3	7.7	7.5	8.3
Gross Domestic Investment	%	8.9	11	8.3	9.4	9.8	14
Changes in Consumer Prices	%	63.6	145.8	171.5	94.7	120.2
Changes in Money Supply (M2)	%	47.2	69.8	283.3	14.5	214.1	32.5
Balance of Payments on Current Accounts (Share of GDP)	%	-6.4	-6.2	-3.5	-1.3	-1.4	-2.1
$ million	-116	-89	-50	-25	-29	-41
Balance of Trade	$ million	-125	-97	-78	-33	-73	-185
Growth Rate of Merchandise Imports	%	4	-7.1	74.4	26.5	12
Growth Rate of Merchandise Exports	%	76.8	8.3	194.4	13.7	-23.7
External Debt Outstanding	$ million	1165	1423	1557	1603	1552	1552
Debt-Service Ratio	%	17.1	41.8
Overall Budget Surplus/Deficit of Central Government (Share of GDP)	%	-2.3	-2.7	-4.5	-3.4	-3.6	-5.7
Nominal Exchange Rate (Annual Average)	(Riel/$)	108.8	167.2	418.3	703	1253	2816

Source: Asian Development Outlook 1993 Appendix Tables, Asian Development Bank World Bank

Note: Date for 1993 are Preliminary.
## 1 Introduction

## 1 -1 A Short History of China’s Economic Reform

After the ten-year long Cultural Revolution, $ ^{1} $ China decided to undertake reform. This policy also aimed at catching up to other economies improving the backwardness of the economy, and responding to the needs of the people, $ ^{2} $ as spelled out at the Third Plenum of the 11th Party Congress in December 1978.

The reforms can be divided into the following periods.

Main focus
Reform under the old system	Transition $ ^{3} $
0)	Preceding Period:	1976-1978	X
1)	First Stage:	1979-1983	X
2)	Second Stage:	1984-1988	X	X
3)	Third Stage:	1989-1991	X	X
4)	Fourth Stage:	1992-present	X

## 1 -1-1 Preceding Period : 1976-1978

The pre-reform period started at the last stage of the Cultural Revolution and ended at the Third Plenum of the 11th Party Congress in December 1978. During this period, the economy was run under the old command system. As China’s economy suffered the damage of the Cultural Revolution and China had already recognized the necessity of modernization in four important fields, $ ^{4} $ they adopted the “10 year National Development Plan” based on the command system at the first plenary of the 5th National People’s Congress in February 1978. This plan focused mainly on the development of heavy industries. $ ^{5} $ But investment in heavy industries exceeded the nation’s ability, and China had to abandon the plan. To achieve the four modernizations and improve living standards, China had to decide on reform at the Third Plenum in December 1978.

## 1 -1-2 First Stage : 1979-1983

The first Stage was from the beginning of 1979 to 1983. China adopted open-door and reform policies on the decision at the Plenum in December 1978. From 1979 to 1983, China's average growth rate in GDP $ ^{6} $ was 10.1 percent. $ ^{7} $ During this period, open policies were strictly limited to the four “Special Economic Zones” (SEZs) $ ^{8} $ and reform was proceeded mainly in rural areas. $ ^{9} $ Based on the fruits of experiments during this period, China started to accelerate its opening and reforms to all economic fields.

## 1 -1-3 Second Stage : 1984-1988

The second stage began in 1984. Besides the government decision to open fourteen additional coastal cities in addition to the SEZs, a “Decision on Reform of the Economic Structures” was adopted at the Third Plenum of the 12th Party Congress. The characteristic
of this period was “Accelerating the Reform and Open to the outside world.” Reforms spread to urban areas, $ ^{10} $ including State Owned Enterprises (SOEs). In rural areas during the period, Township and Village Enterprises (TVEs) developed very fast. The number of foreign direct investment projects increased. $ ^{11} $ The report “Advance Along the Road of Socialism with Chinese Characteristics” $ ^{12} $ and “The Coastal Area Economic Development Strategy” $ ^{13} $ stimulated the development.

From 1984 to 1988, the Chinese economy showed high performance. The average growth rate in GDP was 19.5 percent. $ ^{14} $ The high speed growth also created problems like regional inequality and high inflation. $ ^{15} $ The announcement about price reform in August 1988 caused the hoarding of goods by citizens. $ ^{16} $

## 1 -1-4 Third Stage : 1989-1991

The third stage started as an adjustment (i.e., economic stabilization). From 1989 to 1991, China focused attention on calming inflation. $ ^{17} $ The average GDP growth rate during the period was 11.9 percent. $ ^{18} $

In this period, China certainly succeeded in cooling the economy. Economic management during the period clearly shows the lack of macroeconomic management measures.

## 1 -1-5 Fourth Stage : 1992-Present

In early spring 1992, Deng Xiaoping made a spring tour to southern China. During the trip, he stressed his “seek truth from facts” yet again. In his speech, he clearly declared that market mechanisms are suitable for socialist economies. Even typical capitalist economic structures like stock exchange markets were permitted as a trial if only they might help China achieve good economic development. These speeches had a profound influence on economic policy in China. The tightening policy ended and China began to accelerate its economy again.

In October 1992, the Fourth Plenum of the 13th Party Congress was held. China decided to introduce the “socialist market economy.” Since then, the Chinese economy has continued to develop at a very high rate, although many problems remain in every field. The reform focuses on the state owned enterprises. Many attempts, like ownership, the employment system and social security, are now in progress. The foreign exchange system has already changed. Price reform is proceeding. Symptoms of increasing inflation, as well as a regional income gap can be seen.

## 1 -2 Philosophy of the Reform

China’s reform has unique characteristics. The points are as follows: $ ^{19} $

(1) Started without external pressure

(2) Gradualism and experimentation

(3) Partial reforms spread to the whole country whenever successful

(4) Decentralization

When considering China’s reform, we find no clear theoretical framework. $ ^{20} $ Instead we should keep two Chinese slogan in mind: “be practical and realistic” or “seek the truth from facts.” $ ^{21} $ The slogans are from the Communist Revolution, but are now the key idea in