History of Donor Activity in Cambodia

Although it received support from the Soviet Union, Cambodia was practically isolated from external assistance throughout the 1980s by virtue of the international embargo imposed by the West during the People’s Republic of Kampuchea (PRK) years. Hence, there was widespread hunger, malnutrition and poor health.
But since the signing of the Paris Agreement in 1991, the international donor community has been active in development work providing financial and technical assistance to Cambodia. By the end of 1990s, Cambodia received close to $ 2.5 billion in foreign assistance. (CDRI 2002).
Much of the foreign support extended by development partners in Cambodia since 1991, were targeted towards the country’s social sectors including education and health, primarily to help Cambodians meet their basic needs in the short run. It was much like a first aid response of donors for the deprived population of Cambodia, which heavily suffered from the international aid embargo previously imposed.

Aside from the provision of the basic needs, the restoration of democracy and economic growth were also given emphasis. In fact, the bulk of assistance from numerous donors in the 1990s, not only for Cambodia but for most developing countries were concentrated only on three major sectors - social infrastructures and services, general aid program, and economic infrastructures. Combined, these three sectors took up about 60% of the total aid funds of key bilateral and multilateral donors from 1990 to 1992. (see Thiele et. al. 2006).

Today, Japan, France, Australia, and the United States are among the major bilateral donors of Cambodia. Currently, Japan is the country’s largest donor. Meanwhile, China provides substantial bilateral aid. Economic links between the two countries have also increased in the recent years.

With substantial support from the international community, Cambodia made significant progress within the first half of the 1990s in terms of financial stability and economic recovery. However, future prospects of socioeconomic development for Cambodia depend on the country’s ability to effect reforms towards good governance, including control of corruption, and revision of investment policies among others. The donor community recognizes this, hence has started prioritizing crucial areas such as good governance, control of corruption, local capacity building and private sector participation.

Article by: D.Medrana, 2007
References:
Cambodia Development Resource Institute (CDRI). 2002. Economy Watch – Domestic Performance. Cambodian Development Review. Cambodia: CDRI


Thiele, Rainer, Peter Nunnenkamp and Axel Dreher. 2006. Sectoral Aid Priorities: Are Donors really doing their best to achieve the Millennium Development Goals?. Working Papers. No. 124. Swiss Federal Institute of Technology Zurich.