The Sustainable Net Domestic Product of Cambodia, 1988?2004

Abstract

In the tradition of Hicks (1946), Gross Domestic Product (GDP) is an inadequate measure of national income insofar as it includes, as current income, the depletion of income-generating capital. Using an alternative measure of Hicksian national income called Sustainable Net Domestic Product (SNDP) (Daly, 1996), it is shown that, for the period 1988?2004, Cambodia's SNDP was lower than its GDP. More crucially, the disparity between the two indicators increased from 715 billion riels in 1988 to 4,186 billion riels by 2004 – effectively a six-fold increase in the gap over the study period. From a per capita perspective, there was a sharp decline in the per capita SNDP in 1995. Whereas Cambodia's per capita real GDP rose significantly between 1998 and the end of the study period, its per capita SNDP suffered a marked downturn in 2001 and 2002. Overall, the per capita GDP growth spurt between 1988 and 2004 did not genuinely equate to a similar increase in sustainable per capita income and that, relative to the early part of the study period, Cambodia's much higher per capita level of GDP after 2001 was fuelled by an increased consumption of income-generating capital, in particular, of its forestry and fishery assets.