Cambodia: Lack of Investment in Human Capital Essay examples

Cambodia: Lack of Investment in Human Capital Essay examples

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A critical barrier effecting sustainable growth in Cambodia is the lack of investment in human capital and education by the government. The main issue is that it has been overlooked due to fast increases in economic growth; there was a 7.3% growth rate in 2012 (The World Bank, 2013). However this growth is unequal and has only been focused within a few sectors of the economy, mainly in the capital Phnom Penh. Along with the “rapid expansion of the urban labour market” education has been left to deteriorate (UNDP Cambodia, 2011). In comparison to neighboring countries within the ASEAN Cambodia’s tertiary education is significantly far behind, “in 2007 the enrolment ratio in this sector was just 5%, compared to 12% in Lao PDR, 17% in Indonesia, and 28% in Philippines” (UNDP Cambodia, 2011). This supply side issue resulting from inefficient government spending has big implications on the demand side, attracting only low level jobs to the economy due to the low skilled workforce.

International companies who do wish to invest in Cambodia are further encouraging low skill and low pay, leading to an economy-wide low-production-quality trap occurring when there are O-ring effects “across firms as well as within firms” (Todaro & Smith, p.179, 2009). Kremer’s O Ring theory suggests local production bottlenecks have a multiplicative effect on other production; bottlenecks reduce workers’ incentive to invest in human capital as the return on their skills is lowered. This will further distort growth, the more industries moving towards O-ring reflects sources of growing inequality, therefore an industrial policy should be implemented by the government to encourage quality improvement in human capital in order to generate equal growth through...

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...on, Journal of Economic Perspectives, 24(3), p.33-44. Retrieved 14th December 2013, from

Todaro, M.P. & Smith, S.C. (2009). Economic Development. (10th ed.), Essex: Pearson Education Limited.

UNDP Cambodia. (2011). Human Capital Implications Of Future Economic Growth In Cambodia: Elements of a Suggested Roadmap, 1-176. Retrieved 23rd December 2013, from Strategic Asia

The World Bank (2013). Data. Retrieved 14th December 2013, from

Richardson, J.W. (2008) ICT in Education Reform in Cambodia: Problems, Politics, and Policies Impacting Implementation, p.1-16. Retrieved 14th December 2013, from

UNIAP. (2013). UNIAP Cambodia; The Trafficking Situation. Retrieved 28th October 2013, from

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