Cambodia G12 ECONOMIC DEVELOPMENT project

Cambodia is a country located in the Southern Indochina Peninsula of South-East Asia. Cambodia has a population of 15 million and is bordered by Thailand, Laos and Vietnam. Due to its rich culture, Cambodia has become an attractive tourist destination for many in Asia. Cambodia is also a common destination for voluntourists, as its development is somewhat lacking in comparison to it’s neighbours due to it's complex history in the 1900s concerning the Khmer Regime and the rise of Pol Pot, which dramatically slowed growth and caused the country to fall into disrepair. However fortunately, due to the large influx of tourists, coupled with Cambodia’s natural resources, the country is now experiencing economic growth of up to 7%.

Main industries: tourism, garments, construction, rice milling, fishing, wood and wood products, rubber, cement, gem mining, textiles

Economic Indicators: As seen above, there is large over dependence placed upon agriculture within the Cambodian economy. This is one of the major indicators of a developing country, as the low YED, immobility of labor and volatile prices of the primary industry prevent further economic growth.
Development Indicators

The main barriers to growth for Cambodia are it’s lack of access to technology and capital, as seen by the unemployment figure above, unemployment is very low so it isn’t a lack of human capital, but rather a low level of productivity due to a lack of new technology that are preventing growth. In addition, the level of political turmoil that has plagued Cambodia has prevented any growth as it has massively lowered the standard of living, especially for rural Cambodians.

Refer to the explanation below for analysis of both graphs.

As seen above, whilst Singapore and Cambodia are geographically very close, the level of development and standard of living in both countries is drastically different. In the graph on the left, infant mortality rate is compared to mean years of schooling. We can infer that both countries have seen an improvement in both indicators since the late 1900s, as years of schooling has increased whilst infant deaths per 1000 has fallen significantly. However, infant deaths per 1000 fell much more significantly in Singapore than in Cambodia, owing to the availability of high-end technology and capital in Singapore, that allow large medical advances to be made. There was a slight set-back in Cambodia in 1990, where infant mortality stayed constant for 5 years, before continuing to gradually fall. 1990 is when the Vietnamese troops withdrew from Khmer Cambodia, leading to a fall in external support and Pol Pot's last glimpse of power before he was charged towards the end of the 1990s. Singapore has also recently seen a stagnating infant mortality, likely due to the fact that it is so low, that any deaths at this point are natural and unavoidable. The graph to the right shows how literacy rate and life expectancy have changed in the past few years, and this follows the same trend as the previous indicators as both countries have experienced and improvement in health and education. However in this graph, Cambodia's increase in literacy rate was greater, probably due to the fact that their starting literacy rate was so much lower than Singapore, so it was easier to "mass" increase. Both graphs show promising statistics for Cambodia's development in the future.

Education in Cambodia

The French colonisation of Cambodia initially ignored education, and placed it as a low priority until the late 1950s and 1960s. This meant that in the early to mid 1900s, there was little progress made in the field of education, and only 50-60,000 children were enrolled in primary school. However, once the country gained independence in 1953, the number of children enrolled in school rapidly increased and the country saw a dramatic reform in their education system as elementary and secondary schools were expanded to rural areas, whilst higher education institutions were established. However, the system was essentially wiped out by the Khmer Rouge, as all schools were destroyed and teachers were some of the first to be prosecuted and executed by Pol Pot. This meant that schools had to be built up from scratch again in the 1980s. The education system was completely redone in 1996 to form a formal education structure, which is formulated of 6 years of primary schooling and 6 years of secondary schooling. Education is provided free of charge to all children in both urban and rural parts of the country, whilst private education still exists at all levels, but is mostly available in Phnom Penh, and is run by foreign ethnicities.

Education now comprises roughly 11.1% of total government GDP, and the system seems to be functioning well, with youth literacy rates up around 85% and 88% for girls and boys under the age of 15. 95% of all children are also enrolled in primary school, up from less than 30% in the 1950s. However, whilst there has been lots of development and improvement in education, there are still many issues that need to be addressed. Firstly, schools are so crowded that often, more than 80 kids are squeezed into one class with one teacher, and as a result children only get half day schooling as the schools need a morning and afternoon session to cater for all the students. Despite there being a severe lack of teachers, the teachers are so poorly paid by the government that there is a lack of incentive to work and they often accept extra fees and bribes from students, resulting in some kids being inevitably left out. In addition, secondary school enrollment is only around 50% as many rural teenagers prioritize working in the fields with their parents rather than going to school, thus preventing them from attending any higher education institutions.

Photos of rural education in Cambodia

Micro Credit

In 2004, The Cambodian Microfinance Association was established in the capital city of Phnom Penh. The NGO aims to ensure the prosperity and sustainability of the microfinance sector in Cambodia and plays a vital role in creating local and international networks. They believe that Cambodian citizens should receive financial services through a sustainable system and in a timely fashion, and help microfinance operators to strength communication as well as linking up donors, creditors and investors. There are currently 45 CMA members including 39 licensed microfinance institutions and 6 NGO’s that have contributed to a gross loan portfolio of around 203 billion USD to almost 2 million accounts. The microfinance industry has developed greatly since the 1990s, when it was virtually non-existent, due to the commercialisation of Phnom Penh, as well as work by NGOs and increased funding from the government. Today, microfinance is available, even in the most rural parts of Cambodia and over 80% of clients live in rural areas whilst 81% of clients are women, who have since become more empowered since they’ve been able to borrow/repay their money.

Technology In Cambodia

Technology is one of the fastest growing sectors in Cambodia, and has already begun to reap major benefits for the nation. One in every six businesses launched in 2011 were part of the ICT industry, and today the number of mobile subscriptions in Cambodia exceeds the population. From 2000-2012, internet usage increased by almost 60%, jumping to over 3 million users today. The increase in this mobile and internet usage has enormous potential for business growth and employment opportunities in the secondary and tertiary sectors of the economy, as there is higher demand for skilled labor. Those employed as skilled labor, such as engineers, would therefore receive higher wages and would be able to contribute to greater economic growth. In addition, the increased free flow of information due to the boom in internet usage has helped to build a fair and well-informed society, in which everyone can prosper and unemployment is at an all time low of 1.4%. The use of social networking in Cambodia has been able to bridge people in different parts of the country or even from abroad, allowing those from remote places to promote their ideas on a platform, thus encouraging entrepreneurship. In March of 2012, the US embassy organized Cambodia’s first tech camp to bring together tech experts from Silicon Valley, with NGO’s and Cambodia’s youth to discuss how technological advancements can be used to improve the quality of life in Cambodia. The ideas discussed ta the camp are still being implemented today, with the country experiencing greater women empowerment and youth participation in the economy. Lastly, the use of technology and Internet has allowed for more people to become educated through internet classes and online collaboration.

Cambodia has had a history of political instability, which has greatly dampened it's economic growth. The original occupation by french colonies resulted in minimal economic growth, as they neglected by parts of the economy and the French were solely focused upon improving their way of life, rather than the Cambodians. However, after independence in 1953, economic growth improved and the standard of living for many Cambodians, particularly those in rural areas, rose as well. However the establishment of the Khmer Regime by Pol Pot, was politically very unstable and caused a large amount of both civil and external violence. The healthcare and education systems were both destroyed and any skilled labour, such as teachers, doctors and lawyers were all executed as Pol Pot tried to totally "restart" the country from scratch. This resulted in a dip in economic growth until the late 1970's, where the country once again gained independence, and turned the economy from command, back into a free market. Since then, the country has been experiencing fairly steady economic growth, and the advancement in technology since 2000, has allowed economic growth to reach an all time high of 8%. However with this, there has been an unfortunate increase in corruption. As the country starts to develop and become more wealthy, the political instability and corruption has increased, so there is more violence than in previous years, however it is marginal in comparison to that during the Khmer Regime. Cambodia is ranked 21 points out of 100 in the perception corruption index (0 is completely corrupt).

Changes in HDI in Cambodia. The dip in HDI between 1970-1980 is due to the political instability leading up to the Khmer Regime, which was from 1975-1980. A visible boom in growth is visible after 1980, as the country began to prosper in it's independence.

Export Growth

Since the mid-200s, Cambodia had significant progress concerning it’s integration into the global economy through trade and investment. Thanks to rapid growth in export-oriented primary industries in rural areas, as well as increased diversification in the tourism industry, Cambodia has been able to tackle poverty through employment and income creation on a geographically diverse basis. Over the last 5 years, Cambodia’s exports have increased at an annualized rate of 12.2%, to over %12.6 Billion in 2014. Whilst Knit clothing and textiles account for almost half of their exports, Cambodia has also been able to diversify it’s number of exports. Increased trade competitiveness has been due to 3 main factors in Cambodia, which whilst having improved, have much more work required. These include:

- Improved access to markets

- Stronger domestic business environment

- Rising factor and labor productivity

Benefits from Duty-Free Quota-Free programs, together with the implementation of free trade agreements with ASEAN Partners has been responsible for dramatic increases in Cambodia’s exports – particularly the garment industry. With a favourable business environment (low tax) and low labour costs, this increased access has been a major driver for increased investment in manufacturing, which has in turn lead to increased economic growth in Cambodia. Cambodia’s reliance on other countries engaged in its partnerships has allowed Cambodia to enjoy duty-free access for a number of formal exports to final markets.

The share of exports other than garments (dark green line) and tourism (light green line) has grown from 18 to 29% over recent years, with goods such as bicycles, electrical components, rubber, cassava corn and footwear forming significant portions of Cambodia’s next exports. This has in turn allowed Cambodia to diversify and has in turned stabilized economic growth by preventing over-specialization.

As mentioned above, whilst Cambodia has successfully created a favorable investment market, there is much more work to be done in improving the business environment. Trade facilitation costs are 136% of the ASEAN average, and the average release time of cargo is 24 days, compared to the 16 day ASEAN-6 average. However, Cambodia is in the process of completing the plan for the “national Single Window”, which by 2018, should have helped lower the two indicators. Cambodia is still lacking in physical infrastructure, and much more work remains to be done to improve the effectiveness of transport logistics.

Within Cambodia, there is concern that a lack of skilled labour required for high end production processes is holding back potential productivity gains that could lead to a higher GDP. A more skilled labour force would in theory allow Cambodian workers to perform ta greater number of tasks at a lower overall cost, thus enhancing their competitiveness. For this reason, Cambodia is currently addressing the gap that exists between the skills currently present in the labour force, and those necessary for the potential economy. Cambodia’s main issues are the following:

- Many young people graduate from school with weak “soft skills”, such as literacy, numeracy and communication, which are essential to life-long learning and retraining

- Whilst Cambodia’s industries have grown rapidly over the past 10 years, and the number of graduates have rapidly risen, the curriculums remain quite disconnected from the skills needed to succeed in the work place.

- Cambodia lacks a transparent information system to help educators and workers to understand where the demand is and what skills are required.

Credits:

Created with images by sasint - "พระ book culture" • sasint - "golf club the village agriculture" • Luca Nebuloni - "Cambodia_0785" • bvi4092 - "Wat Krom Temple Interior - Sihanoukville, Cambodia" • bvi4092 - "A Market Vendor - Sihanoukville, Cambodia" • sasint - "bicycle his son seat" • janeb13 - "students primary school village" • janeb13 - "students primary school village" • janeb13 - "students primary school village" • shootingjaydred - "Angkor Wat, Cambodia" • art_es_anna - "Supervivència a Cambotja" • bvi4092 - "A Street Vendor at Wat Krom Temple - Sihanoukville, Cambodia"

Made with Adobe Slate

Make your words and images move.

Get Slate

Report Abuse

If you feel that this video content violates the Adobe Terms of Use, you may report this content by filling out this quick form.

To report a Copyright Violation, please follow Section 17 in the Terms of Use.