A complete account of inequality requires that we go beyond differences in income and look at variations in human wellbeing, both today and between generations.
This is the starting point for the United Nations Development Programme’s (UNDP) new global Human Development Report 2019, which provides updated data for 189 nations and cutting-edge analysis on inequalities in human development. This publication is timely, given growing global policy interest and renewed recognition that unchecked inequality can have serious implications – depressing economic performance, undermining political systems and weakening social cohesion. For a rapidly growing lower-middle income country, such as Cambodia, this poses special challenges.
Globally there has been real progress on the basic dimensions of human development and, on average, levels of inequality on key human development markers such as schooling and life expectancy have fallen within and between countries. Nevertheless, the report shows too that the remaining gaps are still sizeable and that disparities on more demanding human capabilities, such as participation in higher education and access to new technologies, are actually getting wider.
It is also often under-appreciated that inequality in one domain, particularly socioeconomic status, interacts with other domains, deepening disparities over time.
Ethnic differences and gender also play a major role in accumulating inequalities. The impact is to exacerbate and entrench differences, compounding families’ and individuals’ exclusion.
Once we start to consider this wider picture of inequality, it becomes clear that the tools we have to measure inequality are inadequate and miss important nuances. Most metrics are focused on averages, which ignore the distributional patterns and we tend to measure income alone. The Gini coefficient, for example, the most widely used measure of inequality, can improve even though the incomes of the poor have actually fallen relative to others, so long as there are compensating improvements in middle or higher income groups.
So, what are the report’s main implications for Cambodia?
First and foremost, the latest human development data shows Cambodia’s overall performance remains strong. Ongoing increases in the key Human Development Index (HDI), which includes education, health and incomes, show that since 1990 Cambodia has had the second highest rate of improvement in Asia-Pacific and the 14th fastest in the world. Now solidly positioned within the medium human development category, Cambodia ranks 146th out of 189 countries. Although still lagging behind its neighbours, it continues to close the gap.
Second, referring to the theme of inequalities, Cambodia’s data shows some major divergences from global trends. Overall human development inequality has fallen substantially. The primary metric – the loss in human development because of inequality in the 3 HDI domains ¬– has fallen from around 29 percent in 2010 to close to only 20 percent in 2018. As the chart shows, compared with its neighbours, Cambodia now ranks better than Laos and Myanmar, but still lags Vietnam and Thailand. The long-term trend is one of progressive improvement.
Several factors are likely to underpin these trends, but two stand-out. First, the remotest and least developed provinces have caught up with their peers, and while Phnom Penh remains a long way ahead, the gap is closing. This falling geographical inequality is underpinned by dramatic improvements in life expectancy. Second, we have seen over the longer term some improvements in gender equality in terms of income, health and education.
The more complex global trends of growing disparities at higher level capabilities are more difficult to judge and provide evidence for Cambodia.
As many global commentators, including global inequality guru Thomas Piketty have observed, we face data and measurement weaknesses, especially affecting those at the extreme ends of the distribution. Nevertheless, there are indications that these disparity trends are evident in Cambodia too. Recent studies have suggested that inequalities in higher education and technical skills are growing, alongside disparities in access to Industry 4.0 technologies and the emerging digital economy. Additionally, analysis of Cambodia’s labour market suggests there is a sizeable gender wage gap. Encouragingly, the Royal Government has recognised these pressures, highlighting the importance of opening up new opportunities, enabling technology transfer, while also strengthening higher education and modern skills training within the Rectangular Strategy Phase IV.
So far, so good
The message in a nutshell: so far, so good for human development inequalities in Cambodia, but policymakers cannot afford to be complacent.
Middle income countries can experience the emergence of serious disparities between areas and groups, driven by differential access to new skills and knowledge, and to capital and markets.
It is vital that these pressures are addressed. As the global Human Development Report makes clear this is best done by securing as an equitable distribution of human capabilities as is possible, and hence opening opportunities for all.
Nick Beresford is Resident Representative, UNDP Cambodia, and Richard Marshall is Country Economist, UNDP Cambodia