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Cambodia Blazes A New Path To Economic Growth and Job Creation

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Abstract:

A unique and successful international policy experiment has been under way in Cambodia for the last six years that demonstrates how trade agreements can create jobs and improve working conditions, pay, and labor rights. In the country's export apparel factories, conditions are monitored by inspectors from the International Labor Organization (ILO), an international public organization. This paper begins with a brief description of the Cambodia project and its economic and historical context. It discusses the novel elements involved in the experiment and describes the key public interventions. It analyzes their impact on the private sector, tracing the changes in incentives faced by firms and resulting changes in corporate behavior. It then looks at practical outcomes in Cambodian factories. A discussion of the costs and benefits of the project follows, including an assessment of its cost-efficiency and the distribution of burdens and benefits. A final section addresses the issue of replicability and improvements that might be made in future applications of these new policy tools.