Course Corrections
As a small open economy, Cambodia has not been insulated from global developments, New French PM Gabriel Attal is young, cunning and gay, historian Emmanuel Todd publishes 'The Defeat of the West'
UPDATE: The World Bank projects growth for Cambodia this year at 5.4 percent, higher than growth in the last three years, but far from the 7.2 percent average annual growth achieved in the decade before the COVID-19 pandemic. Much of this slowdown has to do with a challenging global environment. Weighed down by tight financing conditions, high debt and growing geopolitical and economic tensions, global growth is expected to continue to slow next year for a third consecutive year. Anaemic global trade and investment flows dim the short-term outlook, but also raise concerns over longer-term prospects, especially for developing countries. As a small open economy, Cambodia has not been insulated from these global developments.
New French Prime Minister Gabriel Attal, who was previously education minister and has occupied several government positions since Mr. Macron was elected in 2017, becomes France’s youngest and first openly gay prime minister. A recent Ipsos-Le Point opinion poll suggested he is France’s most popular politician, albeit with an approval rating of just 40 percent.
French historian Emmanuel Todd, whose 1976 book The Final Fall predicted the collapse of the Soviet Union and who last year notably claimed that a third world war has already begun, was promoting his new book, titled La Défaite de l’Occident (The Defeat of the West), which is published in France today. He told Le Point that “the vaporisation of Protestantism in the United States, in England and throughout the Protestant world has caused the disappearance of what constituted the strength and specificity of the West.”
Cambodia 2030: World Bank Projections
As 2023 draws to a close, Cambodia’s economy has been slowing down. The World Bank projects growth for this year at 5.4 percent, higher than growth in the last three years, but still a far cry from the 7.2 percent average annual growth achieved in the decade before the COVID-19 pandemic (Figure 1a). Much of this slowdown has to do with a challenging global environment. Weighed down by tight financing conditions, high debt and growing geopolitical and economic tensions, global growth is expected to continue to slow next year for a third consecutive year. Anaemic global trade and investment flows dim the short-term outlook, but also raise concerns over longer-term prospects, especially for developing countries. As a small open economy, Cambodia has not been insulated from these global developments.
While the external environment has contributed to a cyclical slowdown this year, it has also exposed emerging structural challenges at home. These challenges predate the pandemic, but were masked for several years by rapid capital inflows that fueled a construction boom until COVID-19. Indeed, as we show in the World Bank’s recent Systematic Country Diagnostic Update for Cambodia, Cambodia’s strong economic growth over the past decade was largely driven by factor accumulation, with a negative contribution from productivity (Figure 1b). Investment, largely driven by construction, accounts for more than 90 percent of the growth in the last decade. In contrast, total factor productivity growth – a measure of the efficiency of resource allocation and innovation in the economy – has been negative. One factor contributing to declining productivity has been the slower pace of structural transformation – labor moving from low productivity agriculture to higher productivity manufacturing has slowed in recent years. While agriculture’s share of employment dropped from 56 percent in 2011 to 36 percent in 2016, the labor share of agriculture has since been stable. This, combined with the construction sector’s growth, means fewer workers are shifting into higher-productivity sectors like manufacturing. Aggregate labor productivity growth -a precondition for sustainable growth in wages— has also decelerated sharply over the past five years from an average of 5.5 percent per year between 2011 and 2016 to 2.4 percent between 2016 and 2021. This is despite Cambodia’s aggregate labor productivity level remaining well below Viet Nam and Thailand, which are three and five times higher, respectively.
Higher Growth is Both Necessary and Achievable
Amid weaker growth prospects, there is a sense of renewed urgency to address the rising economic challenges to sustain growth, reduce remaining poverty and achieve Cambodia’s vision to become an upper middle income country by 2030. The recently adopted 2023–28 Pentagonal Strategy outlines an ambitious reform agenda. Implementation is now key, but what are the top priorities?
First, further improvements to the business environment are critical for boosting the productivity and competitiveness of Cambodian firms. The cost of doing business remains relatively high in Cambodia, reducing international competitiveness and inhibiting innovation and shifts into higher value activities. To help support increased private sector investment, Cambodia needs to strengthen the predictability of the regulatory environment and expand small and medium-sized enterprises’ (SMEs) access to finance. Further efforts to streamline complex and restrictive business entry requirements, together with improvements to the functioning of the insolvency framework, would help reduce costs of firm entry and exit. Simplifying and digitising business services, especially the issuance of licences and permits, would reduce the associated costs. More competition would foster cost reductions and innovation and promote productivity growth by shifting market share toward more efficient producers and incentivizing firms to become more productive. To support the tourism sector, a reduction of costs and fees (visa, accommodation, food, transport and entrance fees) – including elimination of unofficial fees – would help attract international arrivals.
Second, upgrading Cambodia's infrastructure and logistics are an important foundation for productivity gains and international competitiveness. Cambodia continues to have a large infrastructure financing gap, resulting in inadequate infrastructure services that are struggling to keep up with rapidly growing demand. Large investments are needed in the energy sector to address the dual challenge of meeting rapid growth in electricity demand (projected to quadruple from 12,400 gigawatt hours (GWh) in 2020 to 54,600 GWh in 2040) while meeting the country’s climate change commitments. Investments are also needed to upgrade basic urban services such as piped water, sanitation, solid waste management, telecommunications and transport, in conjunction with strengthened urban planning. Moreover, gaps in regional connectivity impact the efficiency and cost of cross-border trade and need to be addressed. Investments are needed to address specific infrastructure gaps in domestic and regional transport connectivity. This will improve the East-West corridor across Thailand, Cambodia, and Viet Nam, in addition to the only road corridor connecting Cambodia with Lao PDR. It will also improve the inland waterway connection with Viet Nam and the existing railway operations and infrastructure links with Thailand. It is also important to improve trade facilitation and logistics performance. Further efforts must be made to reduce transport and logistics costs by monitoring the efficiency of main trade gateways, such as ports and border checkpoints.
Third, increasing learning outcomes is crucial to address skills shortages, develop a “future-ready” workforce and drive Cambodia’s productivity growth. Firms are reporting growing skills shortages, and labor productivity growth has declined sharply over the past five years. Few young Cambodian children are being enrolled in early childhood education, which is undermining early development and hindering mothers from returning to work. Primary schools are experiencing a decline in learning outcomes despite improved access. Few students are progressing to secondary school, and those that do are often inadequately prepared and experience high dropout rates. Poorer children are disproportionately affected in this disparity. According to the World Bank’s Human Capital index, a child born in Cambodia today can only expect to achieve about half of her potential lifetime labor productivity if she receives adequate education and health services. Alarmingly, only three percent of 15-year-olds in Cambodia can be said to reach a baseline level of performance in mathematics, only two percent in reading and only one percent in science. This directly affects children’s opportunities to participate in and contribute to Cambodia’s future prosperity. Enhancing educational outcomes will require a multi-pronged approach. Expanding access to quality schooling is important. However, additional incentives like conditional cash transfers, may be required to enable kids, especially from poorer families, to stay in school longer.
Finally, climate change further complicates Cambodia’s development. The recent Cambodia Country Climate and Development Report (CCDR) by the World Bank clearly shows that Cambodia is heavily exposed to climate risks. Our simulations show that losses from climate impacts could amount to as much as nine percent of the GDP by 2050 without adaptation. Fortunately, these losses can be significantly reduced through targeted adaptation measures (Figure 4a). While the response requires a multipronged approach, some of the most important policy actions involve halting the loss of natural wetlands and deforestation, as these natural areas protect against wildfires, floods, droughts and landslides. Effective implementation of the recently signed Environment and Natural Resource Code will be key in this respect. At the same time, while not a major emitter of greenhouse gases, Cambodia’s economy, including its export sector, is relatively carbon intensive (Figure 4b). The low-carbon transition in the world’s largest markets is driving a rapid structural transformation in the global economy and boosting demand for low-carbon goods and services. To take advantage of the opportunities that arise from this global shift, Cambodia would need to lower the barriers that hinder competitiveness in these areas. These include reducing high tariffs on parts and components for clean energy technologies, which are higher in Cambodia than in peer countries. The low-carbon transition globally also means the costs of clean energy technologies have been declining rapidly, making the increased usage of clean energy more economically viable than even a few years ago. If managed effectively, this could offer the opportunity to lower energy costs, as well as emissions.
Cambodia has made remarkable development progress over the past decades, thanks in large to strong economic growth. To continue its journey towards ending extreme poverty and enhancing living standards, Cambodia needs to maintain high growth. Fortunately, higher growth is not only desirable, but achievable. It will require Cambodia to shift to a more sustainable pattern of growth, supported by higher productivity, bold structural reforms, quality investments in infrastructure and human capital and climate smart development policies.
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Gabriel Attal: Jeune, Malin and Gay
Gabriel Attal, 34, replaces Élisabeth Borne in a cabinet shuffle that President Emmanuel Macron hopes can reinvigorate a term marked by drift and division.
Jan. 9, 2024
By Roger Cohen (Paris bureau chief for The Times London)
In a typically bold bid to revitalise his second term, President Emmanuel Macron named Gabriel Attal, 34, as his new prime minister, replacing Élisabeth Borne, 62, who made no secret of the fact that she was unhappy to be forced out.
Mr. Attal, who was previously education minister and has occupied several government positions since Mr. Macron was elected in 2017, becomes France’s youngest and first openly gay prime minister. A recent Ipsos-Le Point opinion poll suggested he is France’s most popular politician, albeit with an approval rating of just 40 percent.
Mr. Macron, whose second term has been marked by protracted conflict over a pensions bill raising the legal retirement age to 64 from 62 and by a restrictive immigration bill that pleased the right, made clear that he saw in Mr. Attal a leader in his own disruptive image.
“I know that I can count on your energy and your commitment to push through the project of civic rearmament and regeneration that I have announced,” Mr. Macron said in a message addressed to Mr. Attal on X, formerly Twitter. “In loyalty to the spirit of 2017: transcendence and boldness.”
Mr. Macron was 39 when he sundered the French political system that year to become the youngest president in French history. Mr. Attal, a loyal ally of the president since he joined Mr. Macron’s campaign in 2016, will be 38 by the time of the next presidential election in April, 2027, and would likely become a presidential candidate if his tenure in office is successful.
This prospect holds no attraction for an ambitious older French political guard, including Bruno Le Maire, the finance minister, and Gérald Darmanin, the interior minister, whose presidential ambitions are no secret. But for Mr. Macron, who is term-limited, it would place a protégé in the succession mix.
“My aim will be to keep control of our destiny and unleash our French potential,” Mr. Attal said after his appointment.
Standing in the bitter cold at a ceremony alongside Ms. Borne, in the courtyard of the Prime Minister’s residence, Mr. Attal said that his youth — and Mr. Macron’s — symbolized “boldness and movement.” But he also acknowledged that many in France were skeptical of their representatives.
Alain Duhamel, a prominent French author and political commentator, described Mr. Attal as “a true instinctive political talent and the most popular figure in an unpopular government.” But, he said, an enormous challenge would test Mr. Attal because “Macron’s second term has lacked clarity and been a time of drift, apart from two unpopular reforms.”
If France is by no means in crisis — its economy has proved relatively resilient despite inflationary pressures and foreign investment is pouring in — it has appeared at times to be in a not uncharacteristic funk, paralyzed politically, sharply divided and governable with an intermittent recourse to a constitutional tool that enables the passing of bills in the lower house without a vote.
Mr. Macron, not known for his patience, had grown weary of this sense of deadlock. He decided to force Ms. Borne out after 19 months although she had labored with great diligence in the trenches of his pension and immigration reforms. Reproach of her dogged performance was rare but she had none of the razzmatazz to which the president is susceptible.
“You have informed me of your desire to change prime minister,” Ms. Borne wrote in her letter of resignation, before noting how passionate she had been about her mission. Her unhappiness was clear.
In a word, Mr. Macron had fired Ms. Borne, as is the prerogative of any president of the Fifth Republic, and had done so on social media in a way that, as Sophie Coignard wrote in the weekly magazine Le Point, “singularly lacked elegance.”
But with elections to the European Parliament and the Paris Olympics looming this summer, Mr. Macron, whose own approval rating has sunk to 27 percent, wanted a change of governmental image.
“It’s a generational jolt and a clever communications coup,” said Philippe Labro, an author and political observer.
Mr. Attal has shown the kind of forcefulness and top-down authority Mr. Macron likes during his six months as education minister. He started last summer by declaring that “the abaya can no longer be worn in schools.”
His order, which applies to public middle and high schools, banished the loosefitting full-length robe worn by some Muslim students and ignited another storm over French identity. In line with the French commitment to “laïcité,” or roughly secularism, “You should not be able to distinguish or identify the students’ religion by looking at them,” Mr. Attal said.
The measure provoked protests among France’s large Muslim minority, who generally see no reason that young Muslim women should be told how to dress. But the French center-right and extreme right approved, and so did Mr. Macron.
In a measure that will go into effect in 2025, Mr. Attal also imposed more severe academic conditions on entry into high schools as a sign of his determination to reinstate discipline.
For these and other reasons, Mr. Attal is disliked on the left. Mathilde Panot, the leader of the parliamentary group of extreme left representatives from the France Unbowed party and part of the largest opposition group in the National Assembly, reacted to his appointment by describing Mr. Attal as “Mr. Macron Junior, a man who has specialized in arrogance and disdain.”
The comment amounted to a portent of the difficulties Mr. Attal is likely to face in the 577-seat Assembly, where Mr. Macron’s Renaissance Party and its allies do not hold an absolute majority. The change of prime minister has altered little or nothing for Mr. Macron in the difficult arithmetic of governing. His centrist coalition holds 250 seats.
Still, Mr. Attal may be a more appealing figure than Ms. Borne to the center-right, on which Mr. Macron depended to pass the immigration bill. Like Mr. Macron, the new prime minister comes from the ranks of the Socialist Party, but has journeyed rightward since. Mr. Attal is also a very adaptable politician, in the image of the president.
The specter that keeps Mr. Macron awake at night is that his presidency will end with the election of Marine Le Pen, the far right leader whose popularity has steadily risen. She dismissed the appointment of Mr. Attal as “a puerile ballet of ambition and egos.” Still, the new prime minister’s performance in giving France a sense of direction and purpose will weigh on her chances of election.
Mr. Macron wants a more competitive, dynamic French state, but any new package of reforms that further cuts back the country’s elaborate state-funded social protection in order to curtail the budget deficit is likely to face overwhelming opposition. This will be just one of the many dilemmas facing the president’s chosen wunderkind.
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USA is most profound source of global instability,
Top French historian Emmanuel Todd interview (in French) on Radio Monte Carlo (RMC)
Emmanuel Todd: death of Protestantism explains Western decline
The French historian claims that religion has lost all influence
Western decline can be attributed to the “vaporisation” of Protestantism, according to the leading French historian and public intellectual Emmanuel Todd. Speaking to French centre-right magazine Le Point last week, Todd highlighted the “values of work and social discipline” inherent to the Christian branch, which he appraised as central to the rise of the “Anglo-American world”.
Todd, whose 1976 book The Final Fall predicted the collapse of the Soviet Union and who last year notably claimed that a third world war has already begun, was promoting his new book, titled La Défaite de l’Occident (The Defeat of the West), which is published in France today. He told Le Point that “the vaporisation of Protestantism in the United States, in England and throughout the Protestant world has caused the disappearance of what constituted the strength and specificity of the West.”
The historian added that we have passed the “active stage” and the “zombie stage”, and are now approaching “stage zero”, whereby religious belief loses all influence within the Western world. He cited the passage of laws relating to same-sex marriage as the “ultimate indicator” of the transition from the “zombie” to “zero” stage.
Within this theory, the “zombie stage” incorporates much of the US rise to prominence during the first half of the 20th century — what Todd calls “Great America, from [Theodore] Roosevelt to Eisenhower”. This was “an America that retained all the positive values of Protestantism, its educational effectiveness, its relationship to work, its capacity for integrating the individual into the community”. Ultimately, the historian suggested, “the Protestant matrix has disappeared at the height of American power”, not least because of the Catholic faith of incumbent President Joe Biden.
In Todd’s view, this religious and cultural decline is paired with Anglo-American economic defeat. “Globalisation has made not the West in general but specifically the United States unable to produce the weapons necessary for Ukraine,” he told the magazine. “The Americans sent the Ukrainians into disaster during the summer offensive with insufficient equipment.”
Todd has previously been described as an “anti-American” thinker, particularly following the publication of his 2001 book After the Empire, which focused on the United States’ waning status as a global superpower. When challenged on this by Le Point, he argued that America “is falling into nihilism and the deification of nothing”. He defined this nihilism as “the desire for destruction, but also of the negation of reality. There are no longer any traces of religion, but the human being is still there.” This mindset has been the catalyst, in Todd’s opinion, for American escalation of foreign wars, with the Gaza conflict being the most recent example.
Criticised in the Le Point interview for an alleged sympathy towards Moscow’s present leadership, including referring to Russia’s “authoritarian democracy”, Todd reiterated that he does not think that Putin has won total victory in Ukraine, but found parallels between the country’s cultural history and Western Protestantism. “What is common to Protestantism and Communism is the obsession with education,” he said. “Communism established in Eastern Europe developed new middle classes. And it was these middle classes who then decreed that they were liberal democracy in action and that the Russians were monsters.”
Todd sees another declining world power as a precursor to America’s fall. “England is even less powerful than France. The English don’t really have nuclear weapons. They are not even capable of making themselves hated in Africa, like us,” he told the magazine. “The English ruling classes were a model for the American ruling classes. The current warmongering madness of the English has certainly had a very bad influence on the Americans.”
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