2. Development Cooperation in 2006

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Chart Thirteen. Reallocations of Development Assistance Between Sectors

The charts above show reallocations in the periods 2005 to 2006 (left-hand side) and between 2002 and 2006 (right-hand side). Aggregate disbursements in 2006 declined 2.5% compared to the previous year while in the period 2002 to 2006 aggregate disbursements increased by 12%. These aggregate changes provide some benchmark by which to assess the relative changes in sector allocations (the percentage change in sectors is indicated in the text boxes beside some of the sector bars in the above charts).

Consistent with the analysis presented earlier on NSDP alignment, agriculture and transport are shown to have experienced a decline across both periods, which is surprising given that these sectors are central to the growth components of the NSDP.

Other than that there does not appear to be any clear trend between changes in the last year and over the previous five. The health and HIV/AIDS sectors have benefited from the largest increases since 2002, although in percentage terms the biggest increases are in the manufacturing and telecommunications sectors. It is also notable that, despite receiving the largest increase in absolute terms last year, allocations to governance and administrative reform have actually fallen quite sharply since 2002.

Trends in Funding Modalities

This next section considers the types of support provided to Cambodia. Each modality makes a potentially significant contribution to the NSDP but, at both macro and sectoral levels, it is necessary to recognise the complementary roles of different types of support. It is the role of Government, in dialogue with TWGs, to consider the appropriate mix of development assistance modalities within each sector.

An analysis of trends in types of aid is essentially confined to a consideration of technical cooperation (shown as combined in the chart overleaf) and investment support; other forms of support are relatively insignificant compared to these two modalities. Over the past five years, it can be seen that investment support has grown considerably from USD 191 million to USD 276 million. By contrast, technical cooperation remains unchanged at USD 275 million and has been broadly stable throughout the period.

Table Ten. Disbursement by Type of Assistance 2002-2006 (USD million)

Source: CDC Database

As a result of these trends, the investment share in aid disbursements has increased from 36% in 2002 to 46.5% in 2006, while the respective share for technical cooperation, presented in Table Ten, has decreased from 52% to 46%. It is also notable that 2005 and 2006 were the first years in which investment-related support exceeded the supply of technical cooperation. 

Chart Fourteen. Disbursement by Type of Assistance 2002-2006

Source: CDC Database

The type of assistance that often requires more in-depth analysis is technical cooperation, which accounts for a significant share of total assistance and is intended to make a major contribution to the national capacity development effort. The Royal Government has previously communicated its views on the use of technical cooperation in supporting the NSDP (see NSDP page 83) and the chart below shows disbursements of free-standing technical cooperation and investment related technical cooperation over the period 2000-2006, together with the combined ratio.

Investment-related technical cooperation, which is associated with supporting capital investments, increased from less than 5% of disbursements in 2000 to USD 86.4 million (15.6% of disbursements) in 2004, before once again declining to USD 31 million (5.2%) in 2006. Free-standing technical cooperation, which provides policy-related and capacity development support, has declined from about 45% of total disbursements in 2000 to 41% in 2006. This reduction appears to be in line with the reduced overall support to governance reforms, which is a sector strongly associated with free-standing technical cooperation, in the same period.

During the data collection exercise for the Report it was noticeable that many partners had difficulty in making the distinction between investment-related and free-standing technical cooperation and the reliability of the analysis is therefore open to question⁵. For this reason, for analytical purposes it may therefore be more useful to consider aggregate technical cooperation, i.e. the combined total of free-standing and investment-related technical cooperation. On this basis it can be seen that the total amount of development assistance allocated to technical cooperation remains very high, approaching almost 50% of total disbursements in 2006, but further analysis may be inconclusive given the concerns relating to data integrity.

Chart Fifteen. Technical Cooperation 2000-2006

Source: CDC Database

Moving beyond aggregate disbursements of technical cooperation, Table Eleven, overleaf, shows the disbursement of technical cooperation, and other modalities, by development partner in the years 2005 and 2006. Based on the data provided by development partners it can be seen that the US is the largest provider of technical cooperation, providing USD 51 million of support in 2006. Similar to Finland, Canada, and New Zealand, the bilateral development assistance provided by the US comprises wholly of technical cooperation.

These results are informative but, as noted above, many development partner data focal points communicated their lack of understanding about TC definitions and classifications. This may have resulted in a higher than usual error in the data and indic