Cambodia: From Battlefield to Global Marketplace

It’s 6:30 a.m. and the trucks are already rolling in. Each of the open-roof vehicles is packed — standing room only — with young women in their late teens and early twenties, their faces covered against the dust and exhaust fumes. One by one, the trucks pull up by the side of the road and the women wend their way past the food stalls and through the gates of their factory for their morning shift.

This scene on the outskirts of Phnom Penh, Cambodia’s capital, can be seen across the country. The women, mostly from the countryside, account for around 90% of the nation’s 650,000 garment workers who are at the vanguard of what has been described as an economic transformation — one that has gone by almost unheralded. In just 20 years, Cambodia has transformed from a post-conflict, aid-dependent, least-developed country to a dynamic economy with the fastest pace of GDP growth in East Asia.

“Hun Sen’s Cambodia,” writes Sebastian Strangio in his eponymously titled book, “has come full circle, from battlefield to marketplace: Today it is one of the most open economies in Asia, where starting a business is relatively easy and foreign-owned firms can operate without a local partner. Cheap labor, untapped markets and open economic policies have attracted huge inflows of foreign investment from China, Taiwan, South Korea, Malaysia, Vietnam and Thailand.”
According to a report from the Cambodian Development Resource Institute, between 1995 and 2012 economic growth averaged 7.9% and per capita income increased from $248 to $878. GDP growth for this year — on the back of strong performance in garment manufacturing, tourism, construction and agriculture — is expected to reach 7.3%. This puts Cambodia ahead of its neighbors in Southeast Asia. The latest ANZ Asia Pacific Economics report describes Cambodia as “the only country that has been able to grow its exports at a faster pace in the post-crisis period [2007-2008].”

Economic prosperity is showing up in socio-economic indicators such as the poverty rate, which has been halved, improvements in primary school enrollment, and reduced infant mortality. Corruption, clientelism, social inequality and poor infrastructure remain, but the overall picture is brighter than it has been for four decades.

Originally published by Knowledge@Wharton May 12, 2015

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