ABSTRACT
Cambodia has achieved remarkable economic growth and development over the period from the 1990s to the 2010s, resulting in structural changes in both industrial production and employment patterns and a general improvement in people’s living standards. This good economic performance can be attributed to various factors, including relative political and macroeconomic stability, foreign aid, and foreign direct investment inflows, a young labour force, and improvement in human capital. Furthermore, the widespread circulation of the US dollar (i.e. dollarization) has also played a crucial role in the country’s economic growth and development. The demand for the US dollar in Cambodia has been satisfied by two factors. One is the stable inflows of overseas funds, such as foreign aid and foreign direct investment, and the other is the credit creation in US dollars through financial intermediation within Cambodia’s economy. However, various challenges remain if the country is to stay on track for long-term economic growth and development, which require more effective measures and policy actions. They include the diversification of industrial production, further improvement of governance and institutional quality, ensuring sufficient growth funds, and good macroeconomic environment under dollarization.
