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Future Prospects of the Garment Industry of Cambodia

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Abstract

This paper examines the impact of the participation of Vietnam to WTO as well as of the abolition of restrictions on Chinese exports of textiles and clothing to the US and EU on the Cambodian Economy, by using a computable general equilibrium model. A seminal aspect of this paper is that this paper has succeeded in constructing a Cambodia specific computable general equilibrium model by using one of the first ever input-output tables of Cambodia with 35 different production sectors. One of our most striking simulation results is that the welfare loss would be about 905 million US dollars when either the amount of exports of apparel products from Cambodia or the amount of imports of textiles to Cambodia decreases by 30 percent caused by the participation of Vietnam to WTO as well as the abolition of restrictions on Chinese exports. Another striking result is that the government should reduce the production tax rate for the apparel sector by 68.1 percent in order to keep the welfare of Cambodia unchanged when exports of apparel products decreases by 30 percent. Our simulation results predict that the Cambodian economy has substantially been damaged by the participation of Vietnam to WTO as well as the abolition of restrictions on Chinese exports to EU and the US.

Suggested Citation

  • Sak Sambath & Ryuta Ray Kato, 2009. "Future Prospects of the Garment Industry of Cambodia," Working Papers EMS_2009_12, Research Institute, International University of Japan.
    • Handle: RePEc:iuj:wpaper:ems_2009_12
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    File URL: https://www.iuj.ac.jp/workingpapers/index.cfm?File=EMS_2009_12.pdf
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    References listed on IDEAS

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    7. Mr. Montfort Mlachila & Yongzheng Yang, 2004. "The End of Textiles Quotas: A Case Study of the Impacton Bangladesh," IMF Working Papers 2004/108, International Monetary Fund.
    8. Yamagata, Tatsufumi, 2006. "The Garment Industry in Cambodia: Its Role in Poverty Reduction through Export-Oriented Development," IDE Discussion Papers 62, Institute of Developing Economies, Japan External Trade Organization(JETRO).
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    Cited by:

    1. Pisey Khin & Ryuta Ray Kato, 2010. "The Impact of the Global Economic Crisis on Cambodia," Economics Bulletin, AccessEcon, vol. 30(3), pages 2346-2370.
    2. Souksavanh Vixathep & Nobuaki Matsunaga, 2012. "Firm Efficiency in Cambodia's Garment Industry on the Eve of the Multi-Fiber Arrangement Termination," Asian Economic Journal, East Asian Economic Association, vol. 26(4), pages 359-380, December.

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    More about this item

    Keywords

    Cambodia; Computable General Equilibrium (CGE) Model; Garment Industry; WTO; Textile; Clothing; Apparel; China; Vietnam; Safeguard Restrictions; Multi-Fiber Arrangement (MFA);
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • D60 - Microeconomics - - Welfare Economics - - - General
    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation

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