ADB study marks Cambodia as 7th poorest country

September 1, 2008 at 1:59 am Leave a comment

The Phnom Penh Post – August 29, 2008
Written by AFP
Cambodia one of only two countries in the world where new benchmark basket of goods rises in price, which the bank can’t explain
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The current president of the Asian Development Bank, Haruhiko Kuroda. (AFP)

CAMBODIA is the seventh poorest country out of sixteen surveyed in the Asian Development Bank (ADB) Key Indicators 2008 report, released Wednesday, which also introduced a new way to measure poverty across Asia.

“This is a landmark study,” says Ifzal Ali, ADB chief economist.

For the first time, the ADB has used a poverty line that is specifically designed for the Asia and Pacific region – the so called Asian Poverty Line (APL) which stands at US$1.35 per person per day.

The measure also includes a  new Purchasing Power Parity (PPP), called PS PPP.

PPPs are based on comparisons of prices of a selected set of products, ensuring a common purchasing power
Previously the most common PPP was the Consumption PPP, which is based on the cost of about 650 different products from rice to cars in 140 countries all over the world.

To ensure that comparable products could be found in all 140 countries, many of the products chosen were high-quality products.

“The point is that these are not products relevant to the poor”, says Rana Hasan, ADB Senior Economist and one of the authors of the report.

The ADB study used a PPP defined by the products the poor would buy, (lower quality products in smaller quantities) in order to better compare poverty across countries.

The new PPP, called PS PPP, uses prices collected by special “poverty-specific” price surveys carried out in the 16 countries.
“In our opinion the best way to compare poverty [internationally] is the PS PPP,” said Rana Hasan.

The report, which is based on numbers from 2005, shows that the number of poor drops when using the new PS PPS compared with the old Comsumption PPS using the new Asian Poverty Line – except in Laos and Cambodia.

In Bangladesh the percentage of poor drops from 58.2 percent using the Comsumption PPP to 42.9 when using the new PS PPP. In Laos and Cambodia the percentage goes up using the PS PPP.

Local prices rise
In Cambodia it increases from 35.4 percent to 36.9 percent or 5.06 million people.

 The ADB has no explanation for this.

“I want to make clear that we are not saying that the poor in Cambodia pay more than the not poor people.

“The poor are still paying less but not that much less,” says Rana Hassan, mentioning a low range of quality products, or that the poor buy more of the same products as the not poor people as other posible explanations.

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