Academic journal article Journal of Southeast Asian Economies

Cambodia's Garment Industry: A Case Study in Governance

Academic journal article Journal of Southeast Asian Economies

Cambodia's Garment Industry: A Case Study in Governance

Article excerpt

I. Introduction

Representing 14 per cent of Cambodia's GDP, the garment industry has been the single largest foreign exchange earner for Cambodia for at least a decade. How did this happen and what does this mean? This paper explores the birth of the garment industry in Cambodia and its maturation right up to the global financial crisis, which has provided the most severe test for the industry's competitiveness. The garment industry is one of the few sectors--possibly the only--that has avoided complete capture by the authorities. This could be due to the remarkable influence of Greater China (Hong Kong, Macau, Mainland China, Singapore, and Malaysia) investors who claim 70 per cent of garment factories, as well as 70 per cent of the executive committee that runs the country's trade association known as the Garment Manufacturers Association in Cambodia (GMAC). It could also be attributed to the industry's strength in numbers and their foreign nature (93 per cent non-Cambodian) resulting in too many firms to capture. Following this introduction, an analytical framework on governance and literature review are elaborated. The role of Greater China in garments is a natural segue to the dimensions of China proper's influence and interests in Cambodia, a small country of only 14 million people. The paper ends with an examination of the hand-in-hand governance arrangements and labour successes, trials, and tribulations that may explain the rise of the garment industry but also its present-day challenges.

II. Governance Analytical Framework and Literature Review (1)

Billionaire George Soros has proffered that "the main cause of misery and poverty in the world is bad government", (2) Mr Soros is by no means the only person to believe as much. Indeed, the idea of good and bad government has a long history, as long as there have been governments to rule nations. (3) At a Royal Institute of International Affairs dinner address on the governance of India on 26 April 1927, Sir Stanley remarked:

   Without using the language of hyperbole, it
   seems to me that we are confronted in India, and
   not only there, in Asia and Africa, with a problem
   of immense difficulty--the establishment
   of responsible government, and that based on
   democratic principles--for I know no other
   --in a country where, though it has produced
   individual men of genius in almost every field,
   the sense of discipline in every unit required for
   a lasting system of efficient democracy has not
   been developed to any considerable extent. (4)

Both Mr Soros and Sir Stanley had similar normative notions of government in mind when they spoke on the one hand of "bad government", and on the other hand, of "responsible government". Throughout this article, the word governance will be used to denote "the traditions and institutions by which authority in a country is exercised". (5)

The Africanist and comparativist, Goren Hyden, defines governance as "the conscious management of regime structures, with a view to enhancing the public realm". (6) This is one of a series of definitions of governance collected by Joachim Ahrens and shown in Table 1.

Frischtak, Hyden, and Chazan are all explicit in their definitions that governance relates to the public or the collective good. In fact, they make a distinction between government (which might be wholly centered on the realm of private interests) and governance. Likewise, Bratton and van de Walle's focus on social consensus also implies a collective aspect. Only Kjaer's definition is truly completely neutral about the content of policies.

The definitions collected by Ahrens demonstrate the "academic" picture, that is, before multilateral institutions like the World Bank and the Asian Development Bank (ADB) began to narrow the term's meaning to "the manner in which power is exercised in the management of a country's economic and social resources for development". …

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