Preferential trade treatment and industrial development: The case of Cambodia's garment industry

The garment industry is important for Cambodia's economy not only because it generates noticeable export earnings and employment, but also because it contributes significantly to the economic growth of the country. Due to the bilateral trade agreements that exist between Cambodia and the USA, the majority of Cambodia's garment exports are destined for the US market. The European Union (EU) has also given preferential treatment to Cambodia's export of garments and this is expected to lead to an increase in the volume of Cambodia's export of garments to the EU. Thus, the case of Cambodia indicates that preferential treatment by developed countries may contribute significantly to the export expansion and economic growth of a developing country. In terms of foreign direct investment (FDI) inflows, China has played a leading role. China's investment in Cambodia's garment industry has enabled a strengthening of production capacity.