Agriculture, Markets, and Poverty: A Comparative Analysis of Lao PDR and Cambodia

Abstract

Lao PDR and Cambodia have been transitioning to a market-oriented policy regime. Both are agrarian economies with agriculture contributing about one-third of the gross domestic product (GDP). This study assessed their prospects of achieving the first Millennium Development Goal (MDG 1, extreme poverty eradication) and the centrality of agricultural growth in achieving this goal. As these are macro relationships, richer insights on determinants of poverty were obtained by detailed analyses of recent household surveys in these countries. Some of these insights relate to access to markets, returns to crops, education, land size, non-farm activities, ethnic affiliation, and rural infrastructure, with unavoidable variation due to differences in the coverage of the household surveys used. Another major theme studied for Cambodia is integration of farmers (especially smallholders) into markets, focusing on barriers between large and smallholders (e.g., transaction costs). An accelerated transition to a more market-oriented policy regime may promote not just a more efficient agriculture but also a more equitable outcome.