Working Papers   8

Cambodia: The Challenge of Productive Employment Creation

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Economic growth in Cambodia came to an abrupt halt in 1997 as the domestic political crisis and the external financial crisis took their toll. However, Cambodia has been comparatively mildly affected by the Asian crisis and, provided that political stability can be achieved, there are good chances that the economic decline in 1997 will become little more than a parenthesis. A more fundamental development challenge facing the country is the very rapid increase in the labour force as the large cohorts born in the early 1980s enter the labour market. A major weakness in the economic development to date has been its narrow base. It has largely been attributed to growth in the urban industrial and service sectors, while the performance of agriculture has been rather lacklustre. The twin goals of productive employment generation and poverty alleviation will require much more dynamic development of agriculture and of the rural economy as a whole to succeed. Access to productive assets—i.e. land, physical and human capital—and insecurity arising from the absence of the rule of law, are identified as the factors with the strongest bearing on poverty.

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