Cambodia 1998-2008 : An Episode of Rapid Growth

Cambodia's growth over 1998-2008
has been remarkable (almost 10 percent per annum for a
decade). This paper applies a "growth diagnostic"
approach to understand how this happened and how it can be
sustained. Past growth has been driven by the coincidence of
a set of historical and geographic factors (including
opportunistic policy responses), together with the use of
natural assets (although in a non sustainable way) and the
elaboration of productive sector-specific governance
arrangements. Several of these factors are unfortunately not
self-sustaining and the global economic crisis of 2008-09 is
exposing these vulnerabilities. A growth diagnostic flags a
number of short-term priorities to ensure the
competitiveness of existing industries, as well as more
medium-term priorities for the country to continue
attracting foreign investment and start mobilizing more
domestic savings. A key economic policy objective is the
diversification of the economy, which requires a reduction
in unproductive risks and costs as well as creative
solutions to coordination failures.