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The Garment Industry in Cambodia: Its Role in Poverty Reduction through Export-Oriented Development

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  • Yamagata, Tatsufumi

Abstract

Cambodia's export-oriented garment industry has contributed greatly to poverty reduction in the country through employment of the poor. This paper provides a statistical verification of this contribution based on firm-level data from 164 sampled companies collected in 2003. Its main conclusions confirm the substantial impact that employment in the garment industry has had on poverty reduction in Cambodia. Firstly, entry-level workers receive wages far above the poverty line. Secondly, females make up the predominant share of the main category jobs in the industry. Thirdly, barriers to employment and to promotions up to certain job categories are not high in terms of education and experience. Another important finding is that a typical sample firm exhibited high profitability, although there was wide variation in profitability among firms. This average of high profitability could be a good predictor of Cambodia's viability in the intensified competition since the phase out of the Multi-Fiber Arrangement (MFA) at the beginning of 2005. A point of note is that Cambodia's pattern of industrial development led by a labor-intensive industry is similar to that of neighboring countries in East Asia which earlier went through the initial stage of industrial development, except that Cambodia has lacked a strong government industrial promotion policy which characterized the earlier group.

Suggested Citation

  • 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).
    • Handle: RePEc:jet:dpaper:dpaper62
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    Cited by:

    1. Yoko Asuyama & Dalin Chhun & Takahiro Fukunishi & Seiha Neou & Tatsufumi Yamagata, 2013. "Firm dynamics in the Cambodian garment industry: firm turnover, productivity growth and wage profile under trade liberalization," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 18(1), pages 51-70.
    2. Dennis Arnold, 2013. "Workers’ agency and re-working power relations in Cambodia’s garment industry," Global Development Institute Working Paper Series ctg-2013-24, GDI, The University of Manchester.
    3. Pisey Khin & Ryuta Ray Kato, 2010. "The Impact of the Global Economic Crisis on Cambodia," Economics Bulletin, AccessEcon, vol. 30(3), pages 2346-2370.
    4. Cuyvers, Ludo & Soeng, Reth & Plasmans, Joseph & Van Den Bulcke, Daniel, 2011. "Determinants of foreign direct investment in Cambodia," Journal of Asian Economics, Elsevier, vol. 22(3), pages 222-234, June.
    5. Tanaka, Kiyoyasu & Greaney, Theresa M., 2024. "Trade and employment in the formal and informal sectors: A natural experiment from Cambodia," Journal of Asian Economics, Elsevier, vol. 90(C).
    6. Lopez-Acevedo, Gladys & Robertson, Raymond, 2012. "The Promise and Peril of Post-MFA Apparel Production," World Bank - Economic Premise, The World Bank, issue 84, pages 1-4, May.
    7. Sryneath Chhuor, 2017. "Potential roles of export orientation of Cambodia’s agriculture and agro-industry: an application of CGE analysis," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 6(1), pages 1-33, December.
    8. Sarraf, M. & Rismanchi, B. & Saidur, R. & Ping, H.W. & Rahim, N.A., 2013. "Renewable energy policies for sustainable development in Cambodia," Renewable and Sustainable Energy Reviews, Elsevier, vol. 22(C), pages 223-229.
    9. Chheang, Vannarith & Hamanaka, Shintaro, 2011. "Impediments to Growth of the Garment and Food Industries in Cambodia: Exploring Potential Benefits of the ASEAN-PRC FTA," Working Papers on Regional Economic Integration 86, Asian Development Bank.
    10. CUYVERS, Ludo & SOENG, Reth & PLASMANS, Joseph & VAN DEN BULCKE, Daniël, 2008. "Productivity spillovers from foreign direct investment in the Cambodian manufacturing sector: Evidence from establishment-level data," Working Papers 2008004, University of Antwerp, Faculty of Business and Economics.
    11. Kiyoyasu Tanaka, 2021. "The European Union's reform in rules of origin and international trade: Evidence from Cambodia," The World Economy, Wiley Blackwell, vol. 44(10), pages 3025-3050, October.
    12. John Pickles, 2012. "South African horticulture: opportunities and challenges for economic and social upgrading in value chains," Global Development Institute Working Paper Series ctg-2012-13, GDI, The University of Manchester.
    13. VAN DEN BROECK, Goedele & MAERTENS, Miet, 2015. "Does Off-farm Employment Make Women in Rural Senegal Happy?," Working Papers 232593, Katholieke Universiteit Leuven, Centre for Agricultural and Food Economics.
    14. Lavopa, Alejandro & Szirmai, Adam, 2012. "Industrialization, employment and poverty," MERIT Working Papers 2012-081, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    15. 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.
    16. Cornelia Staritz, 2011. "Making the Cut? Low-Income Countries and the Global Clothing Value Chain in a Post-Quota and Post-Crisis World," World Bank Publications - Books, The World Bank Group, number 2547.
    17. Fukunishi, Takahiro & Yamagata, Tatsufumi, 2013. "Slow and steady wins the race : how the garment industry leads industrialization in low-income countries," IDE Discussion Papers 412, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    18. CUYVERS, Ludo & PLASMANS, Joseph & SOENG, Reth & VAN DEN BULCKE, Daniël, 2008. "Determinants of foreign direct investment in Cambodia: Country-specific factor differentials," Working Papers 2008003, University of Antwerp, Faculty of Business and Economics.
    19. Melanie Beresford, 2009. "The Cambodian clothing industry in the post-MFA environment: a review of developments," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 14(4), pages 366-388.
    20. Jodie Keane, 2013. "Rethinking Trade Preferences for Sub-Saharan Africa: How Can Trade in Tasks Be the Potential Lifeline?," Development Policy Review, Overseas Development Institute, vol. 31(4), pages 443-462, July.
    21. Chantha Hor, 2021. "Assessing the dynamic tourism inter-industry linkages and economic structural changes in Cambodia’s economy," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 10(1), pages 1-24, December.
    22. 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.
    23. Yamagata, Tatsufumi, 2007. "Prospects for Development of the Garment Industry in Developing Countries: What Has Happened Since the MFA Phase-Out?," IDE Discussion Papers 101, Institute of Developing Economies, Japan External Trade Organization(JETRO).

    More about this item

    Keywords

    Cambodia; Export-oriented industrialization; Garments; Poverty reduction; Apparel industry; Exports; カンボジア; 貧困削減; アパレル産業; 輸出;
    All these keywords.

    JEL classification:

    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • L67 - Industrial Organization - - Industry Studies: Manufacturing - - - Other Consumer Nondurables: Clothing, Textiles, Shoes, and Leather Goods; Household Goods; Sports Equipment
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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