Cambodia: Resource Cursed (again?)

CEDAC farmer showing us his future plans for his farm. The authors of 'Poor Economics' claim that a cash-transfer program to the poor may allow them to concentrate on longer term planning since their daily needs are satisfied.

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"Every nation wants to strike oil, and after it happens, nearly every nation is worse off for it. It may seem paradoxical, but finding a hole in the ground that spouts money can be one of the worst things that can happen to a country." 

Sobering first words from Tina Rosenberg in an oped in the NYTimes on the oil resource curse and how oil-to-cash transfer programs can help combat it. Some great ideas here that Cambodia could implement after it starts earning revenues from its recent offshore oil deal with Chevron (an 80-20 split favoring the government). In 'Poor Economics' by Abhijit V. Banerjee and Esther Duflo, which I recently finished and hope to discuss in more depth later, the authors make the case that cash transfer programs, even when they are unconditional (i.e. not dependent on sending your children to school), have a positive impact on the livelihoods and long-term prospects of the poorest families. Cambodian officials would be wise to implement a program along these lines, not just for oil revenues, but for all resource extraction revenues ('legal' timber from ECLs, minerals...even gambling), which are routine causes of conflict. Even assuming that some of the money will be siphoned off by corruption, having a system in place will allow for future improvement and at least some gains toward reducing wealth disparity.

Sadly, I doubt this will be the case. I predict that Cambodia will follow Ghana's lead in pledging the money from oil to big infrastructure projects, the kind that are "likely to be felled by mismanagement and graft" according to Ms. Rosenburg. For example, on a recent work trip to Prey Vang province, the community we were working had a large and modern looking canal nearby. I thought this was a good sign, despite the fact that there were no secondary channels to reach more remote farmers. My co-worker, however, pointed out that it hasn't functioned correctly since several wall portions were washed away during the floods of 2011, and there is "no money" to fix them. He predicted the other new canals and water gates in the province would face a similar fate in the next several years.