Rapid economic expansion brought important gains in national income and poverty reduction. Even so, Cambodia remains one of Asia’s eight low-income countries and the second-poorest country in Southeast Asia. It also faces considerable challenges in building a modern, sophisticated, and vibrant economy, and to raise living standards to the levels of its more developed neighbors. To sustain its strong economic performance, several growth-supporting factors must be strengthened—infrastructure remains inadequate and unreliable, education attainment and skills are subpar, governance is weak, and savings rates are still low.
This study suggests that Cambodia needs to address these highly interrelated weaknesses to avoid getting trapped in low-wage, low-value-added production, and to maintain a stable political environment that is conducive to investment and commerce. Moving into higher-value-added production and climbing the global value chain will require sustained improvements in infrastructure, human capital, governance, and other economic factors.