The Cambodian clothing industry in the post-MFA environment: a review of developments

Melanie Beresford

Journal of the Asia Pacific Economy, 2009, vol. 14, issue 4, 366-388

Abstract: The period 2005–2008 provides an opportunity to examine the impact of ending the Multi-Fibre Arrangement's system of quotas on the development of Cambodia's clothing industry and the wider Cambodian economy. The question is particularly interesting because (1) Cambodia has incorporated independently monitored labour standards and trade union rights into its labour law and (2) the clothing industry plays a centrally important role in growth of exports, GDP and employment. The paper shows that with the exception of the EU market, the increasingly competitive environment did not undermine expansion of the industry prior to the onset of global recession in 2008. The reason for continued success lay mainly in improved price competitiveness through exchange rate movements and the shift of China towards more upmarket production. Productivity gains seem an unlikely source of continued rapid growth. Finally, an examination of monitoring reports indicates that labour standards did not decline as a result of increased competitive pressures. Changes scheduled to take place in the monitoring system might, however, reduce its independence and permit the growth of a sector of the industry with lower standards.

Date: 2009
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DOI: 10.1080/13547860903169357

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