Overcoming Growth Constraints in Cambodia for Inclusive Development

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Cambodia aspires to achieve upper middle-income status by 2030 and high-income status by 2050. However, to realize these goals, the nation must confront various challenges hindering inclusive, sustainable, and resilient growth. Central to this endeavor is the creation of decent-paying and sustainable jobs across formal and informal sectors, including support for small-scale farmers and micro, small, and medium enterprises (MSMEs).

Diversifying Cambodia’s economy is essential for sustained growth. While the country has experienced rapid expansion, its economy’s limited diversification has affected quality and inclusiveness. As Cambodia prepares to graduate from least developed country status, it faces diminishing trade preferences and aid flows. Thus, it must explore new avenues for growth, emphasizing intra-sectoral diversification into higher value-added products and services.

To enable greater intra-sectoral diversification, Cambodia must overcome constraints in human capital and the cost of doing business. Improving the quality of primary and secondary education is imperative, alongside aligning vocational and tertiary education with private sector needs. Moreover, addressing infrastructure deficits, particularly in transportation and energy sectors, is crucial to reducing the high cost of doing business.

The nation must also enhance resilience and sustainability by investing in renewable energy, promoting financial inclusion, and improving healthcare infrastructure. Climate change poses significant threats to Cambodia’s economy, necessitating sustainable agricultural and environmental practices. Additionally, strengthening regulatory frameworks in the financial sector is vital to mitigating risks and ensuring stability.

Cambodia’s transition to a digital economy offers opportunities but requires careful management to mitigate job losses and facilitate workforce reskilling. While the COVID-19 pandemic may have slowed progress towards economic goals, addressing growth constraints remains paramount for long-term prosperity.

Cambodia’s journey towards inclusive, resilient, and sustainable growth may involve challenges and adjustments, but it is essential for shaping the nation’s future and realizing its development aspirations.