When I began to work on this thesis, some two semesters and a summer ago, I was afraid that I would find far too little to fill the following pages. On reflection, I was wrong.

The following is a working draft of my thesis, that is to say, a work that is by no means finished. I know this is so, because there are numerous things left untouched and many books still unopened.

However, one of these glaring omissions will be remedied in the next iteration following the submission to the department of economics of this particular draft. On March 16th, 1995, I acquired a copy of Remy Prud’homme’s L’economie du Cambodge (1969). The draft which you are reading does not contain changes and additions which I plan to make in the next major revision. It is, therefore, a work written in the absence of Prud’homme’s colossal contribution to the study of Cambodia’s economy under Sihanouk.

A serious student might refrain himself or herself from releasing this working draft before having made these important changes; yet, strangely, having read through L’economie du Cambodge these past few days, I feel that the major conclusions reached in “Cambodia’s Economic Development and History: A Contribution to the Study of Cambodia’s Economy” (dated March 22, 1995) would not be radically altered or substantively changed. Of course, there would have been added tons of new and relevant statistics, not to mention the wonderfully telling words of Prud’homme himself in this draft, but again, the general conclusions drawn in the fifth chapter of this thesis echo, quite independently, some of the same conclusions he drew twenty-six years ago, in 1969.

In chapter 20, the conclusion of his book, Prud’homme concludes, among “a” through “h”, the following:

“c) Au cours des dix dernieres annees [depuis 1959] est nee une industrie au Cambodge … d) Le Cambodge jouit d’une monnaie saine mais menacee … g) La situation des finances publiques [l'infrastructure et l'education] n’est pas sans poser quelques problemes … h) L’economie du Cambodge s’est developpee depuis l’Independance a un rythme saitisfaisant, mai qui semble avoir tendance a diminuer. [trans. c) For the last ten years [since 1959] an industry was born in Cambodia … d) Cambodia enjoyed a sound but menaced currency … g) The situation of public finance [infrastructure and education] is not without its problems … h) Since independence, Cambodia’s economy has developed at a satisfactory rhythm, but with a tendency to diminish.]”[1]

It is hoped that the reader will see these findings reflected in my own conclusions nearly three decades after the fact.

Sophal Ear

March 22, 1995

Acknowledgments

The genesis for research on this thesis was a vision in cyberspace. The idea of using the Internet to search the entire world’s localized networks was one which I had wanted to try ever since subscribing to Mr. Parker’s Southeast Asia list “Seasia-L.” I am eternally grateful to the dozens of individuals on Seasia-L who made research for this paper so much more exciting and rewarding. By sending e-mails of both encouragement and help, I could not have asked for more. Their faces I have never seen and may never see, but it is to their illimitable minds I shall always feel obliged.

For help with archival research, I would like to thank Steve Denney of the Indochina Archive, Donald Donato of the World Bank’s Indochina division for information gathered on my behalf at the Bank, Craig Etcheson of CORKR, and Virginia Shih at the South-Southeast Asia Library here at UC Berkeley. For information on to the Cambodian educational and banking system in the 1960s and 1970s, I am grateful to Mr. Peth Lim.

For the theories of economic growth chapter, I especially thank Professor Alain de Janvry for our office hour discussions and his exceptional economic development class from which I learned so very much.

Saving the very best for last, I would like to thank my advisor Professor Martha Olney, the one person whose time and effort went into mentoring me, proof-reading drafts, and making numerous suggestions for this thesis. Without her invaluable help steering my work, I would not have so enjoyed researching and writing the following pages. I’m certain that the final product would have otherwise been nothing short of catastrophic.

Sophal Ear

Oakland, CA

Dedication

This thesis is dedicated to a nation still in mourning: to all of Cambodia.

CHAPTER 1: INTRODUCTION

Le Cambodge ne veut pas mourir . . . Le Cambodge ne doit pas mourir. [trans. Cambodia does not want to die . . . Cambodia must not be allowed to die.]

–Jean Delvert, 1983

Ever since the first Industrial Revolution in Britain, economists have endeavored to model how countries develop. With economic development comes a longer life-expectancy, better education, a higher standard of living, and generally speaking–progress. Beginning with Adam Smith, who believed that the division of labor would cut production costs and give workers dexterity, to Karl Marx who saw industrialization in a Hegelian synthesis and, therefore, as a necessary part of history, the study of economic development continues to chart new chapters in our understanding of how and why countries industrialize. While there are striking similarities among the successful few, namely land, socio-political, and institutional reforms, following an agricultural revolution in which surplus labor is released into industry, the varying factor endowments, political culture, timing, and strength of institutions all make each country’s industrialization experience somewhat unique. Relative economic backwardness and timing in development, notions first introduced by Alexander Gerschenkron in his ground-breaking book of essays Economic Backwardness in Historical Perspective (1962), tell us that for France, Germany, and Russia in the 19th century, the process of development took different degrees of state intervention which depended upon such factors as the presence of financial institutions, and how late they were to industrialize. But what of the Kingdom of Cambodia in the 20th century?

Today, numerous former European colonies in Asia and Africa that were given independence in the aftermath of the Second World War seem to fill the ranks of the poorest countries in the world, deemed to be “underdeveloped” by some, and “less-developed” by others.[2] Srok Khmer, Cambodja, the Khmer Republic, Democratic Kampuchea, the People’s Republic of Kampuchea are only some of the past and present names a small former French colony better known as Cambodia has been called in the last two millennia. Cambodia can today be counted among the least developed and poorest countries in Asia, or for that matter the world. Cambodia’s economy is more agrarian today than it was in 1968. With less than $200 in per capita gross national product (GNP), Cambodia ranks 115th out of 122 countries. Faring hardly better in the composite Human Development Index (HDI) which uses educational attainment and life expectancy, in addition to income, Cambodia ranks 96th out 122 with only 49.7 years in life-expectancy.[3]

This thesis attempts to answer the following questions: According to standard theories of economic development, namely the Harrod-Domar and dual sector economy models, what factors led to Cambodia’s failure to industrialize in the 1950s and 1960s? What could she have done? And what can she do today, given her economic history?

The factors that contributed to Cambodia’s failure to industrialize range from the level of saving to the role of agriculture. Accordingly, the thesis attempts to demonstrate their presence or absence during two periods in Cambodia’s economic history: (1) the Sihanouk years of 1953 to 1970 and (2) the current period (1979-1994).

In the center of Southeast Asia, bordering Thailand on the west and Vietnam on the east, Cambodia is a country slightly smaller than Oklahoma.[4] Unlike her two giant neighbors whose populations have reached 70 million each, Cambodia’s population is small, with only ten million people mostly of Khmer ethnicity. Cambodia’s economy is characterized by the myriad of small plots which cover the 16% of arable land she has. Rice, the staple food of most Asian diets, has long been Cambodia’s primary agricultural output. The economy, like that of many backward countries, is entrenched in agriculture, which controls 80% of its labor force. Any industrial progress made before 1975 was destroyed when admirers of China’s chairman Mao Zedong took power and agriculturally collectivized the Cambodian economy. From 1975 to 1979, money was officially banned,[5] banks were closed, private property was illegal, and the official year for 1975 was zero.

Although most of her contemporary history would suggest otherwise, Cambodia was not always an economic and political disaster area. Broadly speaking, the history of Cambodia’s economy can be divided into three parts: (1) the Khmer pre-colonial period (prior to 1884), (2) the French Colonial experience (1884-1953),[6] and (3) the post-colonial aftermath (1953-present).

In the third period, Cambodia has undergone a number of upheavals including a Vietnamese occupation, a coup d’etat, and a bloody Maoist revolution that is estimated to have killed anywhere from 750,000 to 1.5 million Cambodians. During that time, and to this day, five different regimes have governed the country: (1) King Norodom Sihanouk’s “Kingdom of Cambodia,” from 1953 to 1970; (2) Lon Nol’s “Khmer Republic,” from 1970 to 1975; (3) Pol Pot’s “Democratic Kampuchea,” from 1975 to 1979; (4) the Vietnamese Occupation in which the country was re-named “The People’s Republic of Kampuchea,” from 1980 to 1989; and (5) the current period (following the State of Cambodia which lasted from 1989 to 1991) of Royal co-governance with two Prime Ministers and a democratically-elected parliament. However, political disorder, as even the forefathers of the American Constitution understood in 1789, has never been known to foster an environment in which property rights could be preserved or where economic growth might be sustained. Likewise, in Cambodia.

The chapters on Cambodia’s economy divide her history into two major periods: (1) before 1970 in which Cambodia was at peace (Chapter 3: A Brief History of Cambodia’s Antebellum Economy) and (2) after 1970 in which her economy was devastated by war and revolution (Chapter 4: The Post-Sihanouk Cambodian Economy). The emphasis placed in these chapters is on giving the reader an idea of where Cambodia’s economy stood in each period (using figures on education, microenterprises, and agricultural output) and to a lesser extent on strict macroeconomic data which, even if available, lack validity. For instance, two original sources used in this thesis are propangadistic publications of the early 1970s, Cambodge and Khmer Republic.7 They are offered in conjunction with secondary sources of more definite origins.

Many books have been written about Cambodia, but few have been on her economy. In the late 1950s, a young Cambodian student named Khieu Samphan wrote an economics dissertation in which he argued that Cambodia’s problems of industrialization were the direct consequence of exploitation by the “imperialist” industrialized world.[8] This World Systems approach, forwarded by the Egyptian Marxist economist Amin Samir (1957), resolved that only autarky from the world system would result in the industrialization of the Third World. This theoretical framework combined with Maoism (especially in the aftermath of the Cultural Revolution) became the bedrock for a revolutionary movement called the “Khmer Rouge,” or Red (communist) Khmer. Although everyone today agrees that what Samphan called for in his doctoral dissertation, namely autarky in the form of “self-conscious autonomous development,” never became the actual master plan for the bloody and murderous reign of the Khmer Rouge (of which he had become second in command behind Pol Pot), his thesis still remains the most famous work of Cambodian economic development by any Khmer.[9]

To be sure, this thesis uses more conventional theories of development while at the same time qualifying these with the mention that they do not entirely “fit” Cambodia’s special circumstances and cannot therefore be taken prima facie. The theory chapter which follows this introduction serves as an indicator of what factors are important to economic growth, especially for Cambodia, and how the models themselves function. Equally important is the examination of the literature in economic history chapters (3 and 4).

Work on the post-settlement situation and the rebuilding of Cambodia has flourished in the aftermath of the Paris Peace Accord of 1991 in which Vietnam agreed to withdraw from Cambodia. The World Bank published a country survey on Cambodia in 1992, almost twenty years since it last examined the country. Most recently, the Royal Government of Cambodia issued a policy outline titled National Program to Rehabilitate and Develop Cambodia (1994). In addition, some non-governmental organizations (NGOs) have teamed-up under the umbrella group named Cooperation Committee for Cambodia to write sectoral position papers which were delivered at the second meeting of the International Committee on the Reconstruction of Cambodia in Tokyo in early March 1994.

It is within this context that my work begins. The prospects for Cambodian economic development cannot be achieved until more Cambodians take part in the process of studying the Cambodian economy and its problems of industrialization just as Samphan’s dissertation attempted to do for Cambodia in 1959. The Cambodian economy is still very marred by over two decades of war and destruction, but since the departure of Vietnam’s troops from Cambodia, and a subsequently successful democratic election sponsored the United Nations Transitory Authority on Cambodia (UNTAC) in 1992, Cambodia’s economy has the potential to finally “take-off.”

In sum, this honors thesis presents a brief history of Cambodia’s economy contained within a review of the literature and data in chapters 3 and 4. Chapter 2 reviews the cornerstone theories of economic growth and their application to Cambodia. Finally, though not intended to directly critique Khieu Samphan’s dissertation, my conclusion (chapter 5) attempts to juxtapose our contrasting assumptions and theoretical framework.

CHAPTER 2: THEORIES OF ECONOMIC GROWTH

The overriding objective of the Royal Government is to achieve a fair, just and peaceful society and, through accelerating the rate of economic growth, to raise the living standards of all Cambodians. In short, the Government is striving to achieve sustainable growth with equity and social justice.

National Programme to Rehabilitate and Develop Cambodia, February 1994

In the course of economic development, industrialized countries have taken many twists and turns. It would be tempting to characterize development as merely path-dependent, “historical” or unique for all countries. But this simply isn’t the whole story. To be sure, there are innumerable differences in how countries industrialize–just as there are similarities. For Cambodia, this will not be different. With the exception of OPEC countries (Saudi Arabia, Kuwait, Brunei, etc.), the role of natural resources has paled in comparison to labor, capital and technology, because most countries are simply not natural resource gold mines. The industrialized countries of the world have undergone transformations which have taken them from agricultural to industrial economies. And from there, it would seem, the move to services has already taken place for the United States. This is not to say, however, that America is no longer agricultural (one need only look at Kansas and Nebraska).[10] Forward, backward, and final linkages are indubitably important since the agricultural, industrial, and services sectors all contribute to one another.[11] This chapter intends to draw a brief outline from the theoretical works of a number of development economists in order to set the foundation for the application of these theories to the case of Cambodia in both the past and the present context (see chapters 3 and 4).

The Agricultural Context

We begin our analysis with an evolutionary model of the path of agriculture’s contribution to economic growth by presenting Peter C. Timmer’s “The Agricultural Transformation” (1988). Timmer’s conceptual framework integrates four economic “environments” from Mosher’s to D.G. Johnson’s. “The four phases in the agricultural transformation call for different policy approaches. In the earliest stage of development the concern must be for `getting agriculture moving’, to use Arthur Mosher’s vivid phrase [Mosher (1966)].”[12] In the Mosher environment, a country begins to develop by investing heavily into agriculture, a process colloquially called “priming the pump.” This means investing into the agricultural sector cost-saving and efficiency-improving technologies and capital in order to increase the production output and/or decrease agricultural labor capacity (i.e., to free workers from the countryside) later. During this phase of development, agriculture experiences reduced resource extraction because resources are funneled into it instead. Although Timmer notes “A significant share of a country’s investable resources may well be extracted from agriculture at this stage . . . this is because the rest of the economy is so small. Direct or indirect taxation of agriculture is the only significant source of government revenue.”[13]

The agricultural build-up’s purpose is to produce an agricultural or green revolution, following which the agricultural sector undergoes resource extraction. Like an industrial revolution, a green revolution does not happen overnight. But when it does happen, a country becomes relatively efficient and self-sufficient in at least the production of food and other agricultural products. In this latter phase called the “Johnston-Mellor environment,” agriculture becomes a “contributor” to industry and thus economic growth. Timmer cites agriculture’s establishment of market linkages with industry.[14] We shall see the case of Cambodia to be a peculiar one, for that country may have regressed to a less developed economic state after 1970. For the 1950s and 1960s, the country experienced the beginnings of a “Johnston-Mellor environment,” because public, private, and hybrid industrial enterprises (industries, per se) were forming in a sea of rice, rubber, and other agricultural products. Today, Cambodia may actually be back to the “Mosher” phase once more (when “priming the pump” of agriculture takes place). There are few precedents for this, and fewer instances still of successful development (this late in the game). Therefore, the main analytic emphasis will be placed on the past because things were then less complicated or mired for Cambodia. Were there to have been no starvation, war, or revolution in Cambodia during the 1970s, the bulk of this paper would have likely focused its attention on these years instead. The theories of economic growth examined next all relate to an economy past the Mosher environment (beyond the green revolution). The implications for which include the possibility for industrialization and rapid economic growth.

Three Growth Theories

Theories of economic growth abound.[15] Modern theories have divided themselves into three types, stressing one of three factors: (1) civil institutions, (2) the State, (3) the market. This thesis examines three cornerstone economic models that have wide-ranging implications for the market and the State, and to a lesser extent for civil institutions. They are the Harrod-Domar, the Solow growth, and the Dual Sector Economy models (which includes classical and neoclassical components). Although the mechanics will be stressed, it is the economic and policy implications that will be central to our analysis of Cambodia’s economy, past and present.

The Harrod-Domar Model

Developed by Roy F. Harrod and Evsey Domar in the late 1940s, the Harrod-Domar model follows a Keynesian framework that emphasizes factors believed responsible for economic growth (among them, the capital stock, investment, the marginal propensity to save and so forth).[16] The variables in the model are defined as follows:

Variabl Definition
e
Y output
K stock of capital
k capital-output ratio, also called the
incremental capital output ratio or ICOR
I investment
S level of savings, which equals investment
s marginal propensity to save
g rate of growth
[[Delta "change in"
]]

The structural form of the model consists of four equations:

Equation Explanation
1) Change in income is proportional to the change in the stock in
[[Delta]]Y=(1 capital divided by the capital output ratio.
/k)[[Delta]]K
2) is the ICOR (incremental capital output ratio) and is constant if
k=[[Delta]]K/ output is proportional to the stock of capital
[[Delta]]Y
3) S=sY The level of saving in the economy is equal to marginal
propensity to save multiplied by income. Since there are assumed
to be no taxes, all income is disposable
4) The level of saving in the economy is equal to the level of
S=I=[[Delta]] investment, therefore, all investment comes from saving, which is
K all used to increase the capital stock. The economy is at this
point assumed “closed” to the rest of the world and without a
government sector.

The reduced form of the model follows:

g = [[Delta]]Y/Y = 1/k ([[Delta]]K/Y) = 1/k (S/Y)= 1/k (s Y/Y) = s/k

The rate of growth in income is the ratio of the marginal propensity to save over the capital output ratio.

The Harrod-Domar model is very simple. Among its assumptions are the following: (1) the economy in question is closed to foreign capital flows and has no government sector and (2) the capital-output ratio, k, remains constant. The incremental capital output ratio or ICOR is the incremental capital needed to increase output by one unit. The ICOR contains the fundamental relationship between capital and output, and plays a central role in determining the rate of growth “g” (as defined by Harrod-Domar). The lower the ICOR, the higher the growth rate will be. The ICOR is therefore very important because it tells policy-makers that the intensity of labor in production should be high.

Economic And Policy Implications

The structural form of the Harrod-Domar model where growth equals “s/k” tells us that in order to accelerate the rate of growth, “g”, either one of two things or both must happen: “s”, the marginal propensity to save must increase, or “k”, the capital-output ratio must decrease. In other words, the rate of saving must increase, thereby increasing the amount invested; and/or less capital should be used in production of output (i.e., capital is more productive). In order to increase the marginal propensity to save, saving must be incentive compatible (or made to be such). Real interest rates should be high enough to induce individuals to save, but not so high as to shift investment away from productive capital.[17] At the same time, if wealthier people are likely to save more than those who are less wealthy–since they can afford to do so–this means concentrating wealth in their hands.

In order for any investment to take place, financial institutions must be present. Farmers, for instance, hold most of their wealth in the form of livestock.[18] This prevents the funds, which would potentially be saved in banks, from being invested into other sectors. Therefore, in developing countries, private or public financial institutions must be created. In Japan, the Postal Savings System was created for the purpose of increasing the level of saving. For Japanese investors, Postal Savings is the only tax-free investment available, making it the “world’s biggest repository of private savings and a model for capital hungry industrialisers throughout the world.”[19] Other incentives to promote savings should likewise include tax-free interest earnings (thus increasing the effective interest rate). In Cambodia, a persistent problem since the inception of the Banque Nationale du Cambodge, the BNC (Cambodia’s central bank) in the early 1950s has been the low level of saving (as observed in ubiquitously shrinking BNC deposits) and conversely, the tendency for high consumption (as observed in chronic trade deficits).[20]

Civil Institutions to the Rescue?

Because of high transaction costs, the market for credit can be heavily distorted. The presence of traditional institutions such as alternative lending societies throughout Asia have proven effective in situations of credit scarcity. These associations are unregulated, but are well-known to exist in Taiwan, South Korea, and even the Chinatowns of American cities where small to medium enterprises have difficult access to credit.[21] These institutions serve the purpose of increasing the amount of credit available for lending and promote the economic activity that the Harrod-Domar model postulates will produce economic growth.[22] These institutions must be allowed to exist (if not encouraged to proliferate) in Cambodia despite their imperfections, since the establishment of credit banking takes time and investor confidence (especially outside the Capital, Phnom Penh).[23] Like banks, alternative lending associations offer gains from intertemporal borrowing to all whose net present value today from doing economic activity “x” (including consumption) is higher than it would be in the future at a prevailing interest rate “i”.[24]

Capital and Labor

In order to switch from capital-intensive to labor-intensive manufacturing, capital equipment must increase in price relative to wages (i.e., alternatively, a reduction in the wage level accomplishes the same outcome). Since “K” and “L” are assumed to be substitutes here, an increase in the price of capital would induce producers to utilize less capital (as opposed to labor). If the production function used is of a variable nature, where coefficients are in fact not fixed, the intensity of factor utilization will vary according to the price of the factors themselves. As in most developing countries, Cambodia likely suffers from underemployment,[25] or surplus labor, at least in the agricultural sector. Underemployment in agriculture implies low productivity per worker which means lower agricultural wages. It is important to note, though, that the labor which one expects to fill these labor-intensive jobs with will be unskilled. Gerschenkron was first to shatter the myth that backward countries necessarily industrialized by taking advantage of abundant and cheap labor:

Sometimes…the cheapness of labor is said to aid greatly in the process of industrialization. The actual situation, however, is more complex than would appear on the basis of simple models. . . [The] overriding fact to remember is that industrial labor, in the sense of a stable, reliable, and disciplined group that has cut the umbilical chord connecting it with the land and has become suitable for utilization in factories, is not abundant but extremely scarce in a backward country. Creation of an industrial labor force that really deserves its name is a most difficult and protracted process.[26]

To further reduce the use of capital intensive manufacturing techniques in favor of labor intensive ones, employers should maximize the efficiency of the capital stock they do have, i.e., reduce excess capacity. This can be accomplished in several ways: for instance, moving production from a single shift to two or three shifts thereby employing as many workers as possible, or alternatively, simply substituting labor for capital.

Prices and Wages

Lastly, the reduction of price distortions is essential–where there is an overvaluation of the currency, importing cheap capital goods from abroad becomes incentive compatible. In addition, the problem of high wages due to the institution of minimum wage laws, unionism, and the efficiency theory of wages (ETW) distort the neo-classical labor market equilibrium wage, where real wage equals the marginal revenue product of labor. Minimum wage laws and unions are classic economic distortions in a supply/demand schematic (causing a wage floor and monopoly, respectively) but ETW is less well-known. The efficiency theory of wages argues that employers have an incentive to pay workers more than the equilibrium wage because it will motivate that worker to put into his/her work effort that he/she might otherwise forsake.[27] The alternative to paying slightly above the market wage is supervision and coercion, both of which are costly and one of which is very morally questionable.

Harrod-Domar and Cambodia

In the last analysis, is the Harrod-Domar model realistic for Cambodia? As regards the interest rate and ICOR, Harrod-Domar does a decent job of prescribing internally consistent policies which will produce results that the model predicts. However, the facts that wage repression, the elimination of price distortions, and the creation of more savings are very difficult, if not impossible for Cambodia, makes the Harrod-Domar model a hard-to-swallow prescription. In areas where other models have flourished, Harrod-Domar fails completely because it does not address three major dilemmas for LDCs like Cambodia:

(1) the availability of foreign exchange

(2) the provision of public resources, i.e., public goods like schools, defense, infrastructure

(3) the creation of effective demand–not mere “want” without the wherewithal

Harrod-Domar’s deficiencies are numerous in this light, but the policy implications do offer valuable insights into how Cambodia should have leaned towards during the 1950s and 1960s and must lean today with respect to interest rates, prices and wages, and the use of capital intensive manufacturing.

THE SOLOW GROWTH MODEL

In 1956, economist Robert Solow of MIT developed a classic model of growth.[28] The model, which had implications for balanced growth and technology, can be presented in at least two ways: (1) using a Keynesian national income identity function along with the critical condition that net savings equal net investment[29] and (2) using a capital, labor, land, aggregate production function (in which case factor shares must be econometrically estimated).[30] For the purpose of this thesis, the second method will be used (albeit without the empirical backing necessary) since it incorporates elements which are directly relevant to observations and data on the Cambodian economy in the Sihanouk Era.

In that case, income is made to equal a Cobb-Douglas (C-D) aggregate production function. Output is a function composed of factor endowments which equals national income.

Where, Y = F (K, L, T, A) in which:

Y = national income

F is a function (of the Cobb-Douglas variety)

K = capital stock

L = labor stock

T = land stock (and natural resources)

A = increases in the productivity of factors

A generic C-D function is:

Y = A K[[alpha]] L[[beta]] T(1- [[alpha]] – [[beta]])

Where “A” is a coefficient attached to the productive capacity of capital, labor, and land. “[[alpha]]” and “[[beta]]” are the factor shares for capital and labor, respectively. Land’s factor share is the remainder (1- [[alpha]] – [[beta]]). Each factor share, represents in laymen’s term, the importance of each factor to growth per se, relative to the other factor shares.[31]

Taking the natural log of this Cobb-Douglas function yields the following:

ln Y = ln (A K[[alpha]] L[[beta]] T(1- [[alpha]] – [[beta]]))

= ln A + [[alpha]] ln K + [[beta]] ln L + (1- [[alpha]] – [[beta]]) ln T

In which case one can implicitly differentiate with respect to income (Y) and arrive at a rate of change format for the equation. Income growth becomes a function of factor shares times the contribution of each factor, that is, its rate of change:

%[[Delta]]Y = %[[Delta]]A + [[alpha]]%[[Delta]]K + [[beta]]%[[Delta]]L + (1- [[alpha]] – [[beta]])%[[Delta]]T

From this equation, all factors in the original function are accounted for, but there is what Solow calls an “unexplained residual” in %[[Delta]]A known as total factor productivity. This is precisely where technological change comes into play. Solow’s empirical analysis finally proved something most had known or suspected since the invention of the wheel: technology matters! Technology has improved the productivity of labor, capital, and land in unimaginable ways. Agriculture is made many times more productive when fertilizers are used. Computers have liberated white-collar workers (some would say imprisoned them) and so on. There is little that technology has not yet touched or revolutionized. Not only were land, capital and labor to be the ingredients to the broth of economic growth, but such had become the impact of technology.

Economic and Policy Implications

The Solow Growth model’s application to third world countries like Cambodia is not lost in its original design as a model for developed nations. One need not think of technology as merely computers, but as tractors and fertilizers. To be sure, technology isn’t everything, but policies meant to improve technological growth and productivity for Cambodia, in the form of technological transfers, education in basic science, etc. are all to be understood as contributors to growth. By plotting a longitudinal growth curve that has on one axis real GNP or GDP and the capital stock on the other axis, Solow was able to show that increases in the capital stock would produce growth that was larger than expected. Solow’s explanation: a residual which he concluded was mostly due to technology. Changes in each factor should, therefore, explain changes in the growth of income.[32] Solow’s growth model heightened the importance of technology for both advanced and less-developed countries. For Cambodia, where technology stood in the 1950s and 1960s is one aspect of its failure to grow in those decades.[33]

THE DUAL SECTOR ECONOMY MODEL

The dual sector economy model is actually two models in one. The first is the classical or Lewis dual sector economy model.[34] The second is the neo-classical dual sector economy model. Both models fall under the rubric of “dual sector economy” because they use the same variables and have to do with the same two sectors: agriculture and industry. Both models differ in only one respect: whether they assume the economy to be initially fully employed or underemployed. The Lewis turning point marks the instant at which an economy becomes fully employed, and separates the classical from the neo-classical model.

The basic assumptions of the dual sector classical economy model (a.k.a. Lewis model) are that (1) the agricultural sector exhibits surplus labor. This means that people are idle or working part-time only (in sum, “low productivity”). (2) That the marginal productivity of labor in agriculture is declining because stock of land is fixed (alternatively, the production function exhibits diminishing returns).[35] And (3) that wages in agriculture are determined exogenously. Because there is surplus labor in agriculture, the price of agricultural goods is not expected to increase until the marginal product of the last worker employed cannot be replaced with another identical worker of equal cost. Thus food prices will remain constant so long as there is underemployment in agriculture.

The Growth Mechanism

In both the classical and neoclassical models, the growth mechanism is triggered by increased industrial output which in turn increases profit and therefore investment. This investment, both models assume, is sent back into the stock of capital in industry. The loop is completed when that capital creates more demand for workers from agriculture.[36]

In the neo-classical model, full-employment is assumed. The wages offered to induce more workers into industry must increase, and so too must the wages of the agriculture sector. Why? Because the neo-classical dual sector model begins where the classical model ends (that is, past the Lewis turning point), full employment is assumed, and any labor transfers from agriculture to industry will cause a shortage in agricultural labor. That is, the cost of replacing the worker who has left for work in industry is no longer replaceable at the same subsistence real wage which once prevailed in agriculture. Wages there and in industry must go up.

Contrasting Assumptions and Logic

In order to understand the differences between the two models, their logic must be contrasted. The classical model assumes surplus labor in agriculture, a declining marginal product of labor in agriculture, and exogenously determined agricultural wages. The neo-classical model assumes a fully-employed economy which is at or beyond the Lewis turning point (the point at which full employment has been reached).

As was stated earlier, wages in agriculture are no longer exogenous in the model since they can now increase with the transfer of workers from agriculture into industry. This has implications for both the price of food and other agricultural products since the labor costs are going to increase under the neo-classical framework. Whereas the classical model relies on repressed wages to create the profit necessary to invest in more capital, the neo-classical model turns instead to technological change in agriculture. By increasing the productivity of agriculture, food prices can continue to decrease, thus minimizing pressure for nominal wage increases and keeping real wages (W/P) constant.

Policy And Economic Implications: Economic Growth versus Equity

The implications for Cambodia according to the classical dual economy model is that any repression of the wage in agriculture will increase the level of employment in industry which will help it reach the Lewis turning point more rapidly. This is what some have referred to as the welfare paradox, namely the fact that things must get worse before they get better for a country to industrialize. Income inequality which is low in agrarian economies (hence the oft-used phrase “poverty of equality”) gets worse during industrialization. The Kuznets inverted U shows that virtually all industrialized countries have gone from relatively low inequality to higher inequality (where the inverted U is maximized) and back down to less inequality in the post-industrial phase. This is true of the newly industrializing economies (NIEs) of East Asia: Korea, Taiwan, Hong Kong, and Singapore, which have reached the threshold of inequality and are turning the corner towards less inequality today. For Cambodia, according to Etcheson, land holdings were becoming more concentrated until 1975. Such increasing inequity would indicate, perhaps, that Cambodia was only following the Kuznets inverted U and had not yet reached the maximum.

The neo-classical model is problematic in its assumption of full-employment, especially since most Third World countries like Cambodia have surplus labor,[37] but does offer a less severe solution than repressed wages: technological change in agricultural production. Since technology alleviates both the increase in real wages in agriculture and the price of agricultural output (especially the price of food), thus allowing continued transfer of labor from agriculture into industry without the necessity to increase real wages in either sector.[38]

How realistic is each model for Cambodia? From a purely ideological standpoint, the classical dual economy model has been relatively successful in capturing trends in both capitalist and communist countries. Countries from England to America have all undergone periods of primitive capitalist accumulation for economic growth to take place. The Second World (composed of the former Soviet Union and other socialist countries) renamed primitive capitalist accumulation the Law of Primitive Socialist Accumulation.[39] Evgeny Preobrazhensky invented the scissors under which Soviet labor (resource) was extracted from agriculture and transferred to industry–resulting in rapid economic growth for a few years.[40] In Soviet Russia, agriculture was squeezed by the State in more than one way: high prices for capital equipment, low prices for agricultural output, combined with collectivization. In non-totalitarian countries like Taiwan and South Korea, land reforms were instrumental in shifting labor to the cities (and so too were the enclosures movement in 18th century England to play a similar role). For Cambodian economic history, there were no such sweeping land reforms until 1975.

The neo-classical model is less draconian in its approach especially with the advent of the green revolution in industrialized countries. As Timmer’s agricultural development path shows, one singular event stands out: the fact that all countries which have industrialized have undergone a green revolution prior to an industrial one (with approximately 50 years in lag, but that has shrunk considerably with respect to the East Asian NIEs). The catalyst for an agricultural or green revolution comes when technology significantly increases the efficiency or extent of arable land as with the use, for instance, of fertilizers and modern implements (which make possible higher yields with fewer workers).

Whether the policy implications are realistic matters only if the assumptions made by the neo-classical model are realistic themselves. To be sure, full-employment is not realistic for Cambodia past or present, but then so too are repressive labor tactics. In the last analysis, these models outline “ideal types” in ideal theoretical worlds. But the value of dual sector, Harrod-Domar, and Solow models within Timmer’s greater agricultural context is in their outline of what one can expect given a reduced multitude of factors: L, K, T, and A. Although their simplicity betrays their actual usefulness, the importance of the factors and conditions they elucidate continues to grow still. As the next two chapters on Cambodia’s economic development and history will show, critical factors such as the level of savings, investment in public goods and purchasing power (as it relates to the real wage) were inadequate during the short few years (1953-1970) in which Cambodia’s chances to industrialize were highest. For, as will become evident, these years have been few and far between for Cambodia.

CHAPTER 3: A BRIEF HISTORY OF CAMBODIA’S ANTEBELLUM ECONOMY

There are no four-lane highways through the parks of industrial progress. The road may lead from backwardness to dictatorship and from dictatorship to war. In conditions of a “bipolar world” this sinister sequence is modified and aggrandized by deliberate imitation of Soviet policies by other backward countries and by their voluntary or involuntary incorporation into the Soviet orbit.

–Alexander Gerschenkron, 1962

The contemporary history of Cambodia’s economy has been detailed in few major books or scholarly dissertations since the 1960s.[41] As an understudied subject of economic development and economic history, it is no wonder that most books on Cambodia are contained within the realm of political science and history proper. The pioneering works of such “Cambodianists” as Ben Kiernan and David Chandler have exposed the tragedy of recent Cambodian history by shedding much light on the Khmer Rouge movement which took control of Cambodia between 1975-1978.[42] Economists like Remy Prud’homme and Achille Dauphin-Meunier who have focused on Cambodia’s economy are few and far between. Works by Robert J. Muscat (1989), the Economist Intelligence Unit’s highly regarded Country Profiles and others have marked the literature on Cambodia’s current economic situation. It is within the context of this literature that my analysis of the history of Cambodia’s economic development begins.

As was explained in the introduction, this thesis is concerned with the examination and application of standard theories of economic growth on Cambodia. This means, for the most part, examining Cambodia’s past for clues on the presence or absence of factors contributing to economic growth. In so doing, the theories themselves can be tested against historical evidence (various statistics, trends, etc.).

Before delving into the history of Cambodia’s economy, a word on Cambodian semantics. The use of the word “Khmer” describes more than ethnicity (though 90% of Cambodians are ethnic Khmer); it is also the Cambodian word for a Cambodian citizen and the language Cambodians speak. In the Cambodian tongue, Cambodia itself is called “srok Khmer” meaning “land of the Khmer.” Therefore, Khmer and Cambodian will be used interchangeably.

The Angkorian-Khmer Empire (9th to 15th century)

Cambodia is the last trace of a once grand Khmer Empire which spanned parts of Thailand, Vietnam and Malaysia. The home of one of the largest man-made monuments in the world, the temple-complex of Angkor Wat built in the 12th century; “The Khmer people trace the origins of their state to the 3rd century AD and the emergence of a rich, coastal power known internationally as Funan.”[43]

A Hydraulic Economy

Historians have called the Khmer Empire, which was based around the city of Angkor, a hydraulic economy because of its advanced irrigation system and the many canals leading into the water ways of the Mekong delta which runs throughout Cambodia and Vietnam.[44] All this until “The prodigious conquests and construction efforts of the Angkorian kings came to a somewhat mysterious end in the 15th century. The Kingdom’s vast and intricate canal system silted up due to disuse and lack of repair, an indication of sudden labour losses in warfare or from epidemic disease.”[45] In the half century before French entry into the region, the rustic economy of Cambodia never had more than a population of one million. Leading Cambodia scholar David Chandler has written of the period spanning 1794-1848,

Nearly all the people of [Cambodia] were ethnic Khmer, who occupied themselves with rice farming and with the monastic and official life. Commercial and industrial tasks were handled by minority groups. Marketing, garden farming, and foreign trade for example by Chinese or by people of Chinese descent. Cattle trading, weaving, and commercial fisheries were controlled by a Muslim minority composed partly of immigrants from Malay archipelago… The Kui people in the northern part of the country smelted Cambodia’s small deposits of iron ore.[46]

To be sure, Cambodia is a deeply Buddhist country, perhaps the most Buddhist per capita. Until France made of Cambodia its protectorate in 1863, the Khmer Empire had all but waxed and waned into oblivion from the 15th century onward. Becoming the alternating suzerain of its neighbors Siam (Thailand) and Hue (Vietnam), Cambodia was on the verge of national extinction in the early 19th century.

The French Colonial Period (1863/83-1953)

Ironically, it was because of this French presence that Cambodia was saved from extinction.[47] French domination, despite its transformative impact, stabilized the region by creating clearly defined borders which protected Cambodia from further encroachment by Thailand or Vietnam.[48] When Cambodia became a full-fledged colony of France in 1883, it was from Hanoi, Vietnam that a French governor oversaw it in addition to Vietnam and Laos. The three countries together were called “Cochinchina” or “Indochina.”

A Story of Retarded Development

The contemporary history of Cambodia’s economy begins with her colonization in 1883; yet little happened for quite some time because France’s development focus was on Southern Vietnam, where most tax revenues from Cambodia were sent.[49] “By 1945, [Cambodia] boasted only two lycées [secondary schools], a skeletal road network and no modern industry of importance other than one large rubber plantation. All external economic relations depended on [the Mekong] river transport to Vietnam.”[50] Any substantive economic development would have to wait for another decade following Cambodia’s subsequent independence in the postwar period.

An Agrarian Economy to Begin With

We see from Alain de Forest’s doctoral dissertation, Le Cambodge et la colonisation Française (1980), that Cambodia had begun efforts to modernize and develop under French guidance. He cites the evolution of property rights and the taxation of rice paddies, tobacco, cotton, sesame, sugar cane, indigo, and other foodstuffs.[51] During this same period, Forest boldly notes the end of patronage and the birth of representative institutions in its place. He is mistaken in that respect, because patron-clientelism has not subsided to this day. He writes, “Depuis 1890, l’institution du patronat est en perte de vitesse. Elle va disparaitre dans les annees 1891-1905… [trans. Since 1890, the institution of patronage is quickly fading. Disappearing in the years 1891-1905...]“[52] By the 1930s, little progress on developing Cambodia’s economy had been made. According to Craig Etcheson,

After seventy years of struggle to establish their authority over the proud Khmer Monarchy and peasantry, the French colonial authorities began in the 1930s to plant the first of the great rubber plantations… Developed primarily by French and Belgian capital, rubber production was geared almost exclusively to the export market. The plantations quickly came to dominate the primary sector, and hence the bulk of pre-industrial Cambodian economy. Because of the low productivity of Khmer workers, the French preferred to import Vietnamese labor to tend the plantations.[53]

France’s need to import labor from Vietnam, according to Etcheson, was due to the low productivity of Khmer workers. Such observation regarding low productivity relative to one’s potential heightens chapter 2’s notion of underemployment. It is a problem tackled in the dual sector classical economy model with ominous wage repression. Because labor was instead imported from Vietnam, intersectoral labor flows (from agriculture into industry) for Cambodians was hampered. Was this a setback for industrialization? Not a big one compared to what the general economic policy vis-à-vis Cambodia had been: ignore Cambodia for the most part, get raw materials out of it, and focus on developing Southern Vietnam. On April 25, 1941, French-chosen Norodom Sihanouk-Varman was crowned King of Cambodia at the age of 18. He was described recently by Michael Leifer of the London School of Economics as “the most remarkable political survivor of the post-colonial era.”[54]

The Sihanoukist Period (1953-1970)

As the Second World War wrapped up, the United States urged its allies to decolonize and retire from imperialism. This was not an altruistic demand–freeing up colonies everywhere would offer America’s unscathed and booming economy access into the domestic markets of previously closed and protected colonies. In the postwar years, Cambodia’s economy remained strictly non-industrial: fishing, agronomy, spice cultivation, and (rubber) plantations.[55] The economy continued to export rice and rubber to France, while the latter sent high value added goods (i.e., luxury imports) to the upper echelons of Cambodian society.[56] In the aftermath of Japan’s defeat, Sihanouk began to talk of Cambodian sovereignty (for the second time; he had earlier been unsuccessful). The French defeat at Dien Bien Phu, Vietnam in 1954 marked the end of French presence in Indochina, but was not the final conflict for that region. A year earlier, however, Cambodia had been granted independence peacefully at the Geneva Conference of 1953. Finally, after centuries of national decline, asymmetric interdependence and tutelage, Cambodia was allowed to govern itself. In the following years, Sihanouk made a number of critical choices which would become the determinants of economic development for Cambodia during the 1950s and 1960s.

Hard Choices Ahead

“To govern” John F. Kennedy once said, “is to choose.” Sihanouk, as will become evident, made some poor choices for Cambodia’s economy, when he did make them. But for the most part, it seems, he failed to govern with forethought.[57] For instance, schools proliferated under his reign, but they were seriously deficient. Graduates could expect few worthy opportunities for their hard work.[58] In most instances, according to Mr. Peth Lim, a Cambodian who studied past the baccalaureate level (just about the best one could do while in Cambodia), the few jobs for graduates had all to do with State employment (teaching with tenure, civil service employment, or military service).[59] The number of available jobs were, additionally, insufficient for the growing number of graduates.[60] The educational scheme was simple: study at the tertiary level to become a professor and teach (pyramid schemes work that way too).

Furthermore, the chronic current account deficits were emblematic of a spendthrift morality. Had Sihanouk foreseen the chaos that would envelop Cambodia after 1970, he might have recognized the need to educate more scientists, technologists, and engineers first and foremost. In addition, fiscal austerity, currency devaluation and extensive agricultural modernization would have helped spurt economic growth from the 1960s onward.

A Central Bank of One’s Own

The Sihanoukist period was interrupted for five years on March 2, 1955, when Sihanouk announced to a shocked Cambodian public that he would step down as King in order to run for public office under the newly promulgated Cambodian constitution (based on France’s own). To replace him, Sihanouk’s father, Norodom Suramarit, took the royal throne. Between 1955 and 1960, A. Dauphin-Meunier notes, Cambodia’s first state-led push for economic expansion and modernization began.

There had been no Cambodian currency under French colonization. Until 1945, the three countries of Indochina: Vietnam, Cambodia, and Laos, had monetary policy placed in the hands of France. A monetary union later created in 1950 called L’institut d’Emission des Etats associe d’Indochine stood for the equivalent of a central bank of Indochina.[61] But under King Suramarit and Sihanouk, now duly elected chief of state while simultaneously prince, Cambodia began to issue currency of its own, called the “riel,” under the Banque Nationale du Cambodge (BNC). The riel was pegged to gold at 23.3905 milligrams, additionally, the BNC was backed by 13 million non-tradable French francs and an additional 4 million in France’s own treasury, the Tresor.62 Initially, according to Dauphin-Meunier, the riel appreciated in value each year thereafter because of an expanding economy that had increased foreign exchange reserves. These days of plenty would be numbered, as BNC deposits slowly shrunk to lower and lower levels in following years.[63]

Cambodia Dabbles with Socialism

At about this time, Sihanouk became head of the government with an astonishing 99.8% of the votes for his political party Sangkum Reastr Niyum or Popular Socialist Community. He quickly embarked on a mission to free Cambodia from superpower spheres of influence (which he believed were the cause of Cambodia’s debilitating national decline). Like Egypt and India, Cambodia took a socialist and Non-Aligned Movement (NAM) road to development that was marked by the use of agricultural cooperatives (e.g. public collectives), state-owned enterprises, and numerous construction projects. The “socialism” in Cambodia was one that, according to Dauphin-Meunier, arose not from “scientific socialism” in the Marxist tradition, but from Buddhism. He writes,

Essentielement pragmatique, il [le Bouddhisme socialiste] s’inspire directement de principes religieux, preche l’entraide et l’action sociale dans un souci de depassment de l’homme en lutte contre le mal et les injustices sociales, implique un grand respect de la personne humaine. [trans. In actuality, the socialist Buddhism directly inspires the religious principle, preaches for people to help one another and the social action for the advancement of humankind in struggling against corruption and social injustices, stressing on the great respect for humankind.][64]

As became fashionable during the 1950s and 1960s, Cambodia issued numerous economic plans. The first two-year plan, promulgated in 1956 and renewed in 1958, emphasized the development of infrastructure. The creation of a port at Kampong Som named “Sihanoukville” for maritime traffic eased the burden placed on the Mekong River (which had, until then, been the only pipeline for transport to and from Vietnam into Cambodia). 65 For the next decade, five-year plans were promulgated under Sihanouk’s Planning Ministry for 1960-1964, 1964-1968, and 1968-1972. The transportation system, largely undeveloped under the French, received much needed attention from the mid-1950s onward. The number of kilometer of roads more than tripled from 4,805 in 1955 to 16,697 in 1969.[66]

Practical Propaganda?

Much of the data on education, industry, and health-care, for the years in which Sihanouk reigned as head of state before the 1970 coup d’etat in which he was deposed, were gathered from a pictorial book titled Cambodge (1970). The book’s purpose was to attack the Lon Nol regime which replaced Sihanouk in March 1970 (Sihanouk was the regime as is common in autocratic states). It contains the most detailed breakdown of economic progress made from 1955 to 1968, but ought to be taken with at least some reservation. As a secondary source, Milton Osborne’s recent unauthorized biography of Sihanouk, titled Sihanouk: Prince of Light, Prince of Darkness (1994) cites similar statistics on education facilities, though without references as to where they originated, in its concluding chapter.[67] Overflowing with images of a happy and modernizing Cambodia under “papa” Sihanouk, Cambodge is the unqualified mouth-piece of a defeated leader wanting a return to power.[68] On one page, a caption below a picture of President Richard M. Nixon giving a televised speech on the secret U.S. bombings of Cambodia reads: “L’homme `civilisé’ qui soutient le régime sauvage de Lon Nol. [trans. The `civilized' man who sustains Lon Nol's savage regime.]” It is with this qualification that I offer the following statistics.

Cambodia on Education 1955-1968

The growth of Cambodia’s educational system between 1955 and 1968 is indicative of a pattern of economic expansion and modernization. The primary and secondary school system, which served the population of 5 to 18 year olds, increased significantly between 1955 and 1968.

Table 3.1: The Cambodian Educational System Under Sihanouk

1955 1968
Primary Schools 2,731 5,857
Number of Students 311,000 1,025,000
Secondary schools (Junior High and High 12 180
Schools)
Number of Students 5,300 117,000
Technical and Professional Schools 5 99
Number of Students 334 7,400
Universities 0 9
Number of Faculty 2 48
Number of Students 347 10,800

Source: Cambodge (1970), pp. 23, 24, 26, 28.
Educational Quantity Versus Quality

Underneath this facade lurked the problem of quantity versus quality. What Sihanouk had achieved was an increase in the number of students at all levels of education, but the quality of their education was always in doubt. Milton Osborne writes:

In looking back at his years in power, both Sihanouk and his defenders have made much of his efforts to transform and expand the Cambodian educational system. The claim invites debate, because there is no doubt that educational opportunities expanded in Cambodia, particularly during the 1960s. But at the same time there was an ever-growing gap between the numbers of pupils and students processed through secondary and tertiary institutions and the availability of jobs for those who had completed their education.

The issue of education… is given further interest by the prince’s own ambivalent attitude to formal learning… Publicly he could boast that he determined Cambodia’s economic policies without caring `a rap about political economy, political science or other subjects’, and without having read any books on these subjects. But hand in hand with these views went his determination to found schools, colleges and universities… [Yet] standards in most of these newly established faculties were deplorably low, not least because there were simply not enough trained university teachers.[69]

Equally disturbing, according to Osborne, was that science was not singled out as desirable field to enter, at least not when compared to the humanities and arts. To be sure, there were faculties in all fields imaginable, but incentives to steer students into the more socially beneficial engineering and scientific fields were summarily missing.

The most disquieting claim by Osborne regarding the job potential of graduates was affirmed by my own conversation with Peth Lim. According to Mr. Lim, who studied at the university level during the 1960s, graduate students had one avenue of employment: to become professors themselves. There were curiously few opportunities in the private sector, where education was not highly regarded. The artificial creation of both demand and supply by the government might have worked initially. As thousands of students entered the newly built Universities, however, fewer than half could expect to be employed for the extent of their educational attainment. Openings for professorships were highly competitive, and each year many graduates were turned away.[70]

But still, how much quality could one expect from a country that in 1945 had but two high schools? The Economist sums it up: “In 1960 only 31% of those over 15 could read or write, a legacy of inadequate attention to education dating from colonial rule. Important advances were made during the 1960s, but instruction came to a halt during the war in the early 1970s.”[71]

Dual Sector Economy and Solow Growth Models

Using a factor important to both the Dual Sector Economy and Solow Growth Models–technology as derived from research, education, etc.,–one can see firsthand the disturbing effects that poor quality in education would have upon technology. If education in the sciences is an endogenous growth variable, a determinant therefore of technological change, its importance is all the more increased. The explicit link with the Solow Growth Model is apparent in the unexplained residual which Robert Solow deduced was technology. Conversely, if investment in technology-producing education is inadequate, the rate of economic growth expected in the following years will be diminished.

What of the dual sector neo-classical economy model? The dual sectors model has a technological component with respect to agriculture. Technology in agriculture works to lower the cost of food, thus eliminating the need for increases in the real wage for industry. Later, when agricultural production is examined, a murkier picture of modernization will appear. In the last analysis, however, the absence of a sound educational system was a detriment to Cambodian economic growth then and for the following years.

Health-Care Boom

In addition to education, a number of health-care facilities were added to serve the Cambodian population of over 6 million (in 1968). The number of hospitals tripled from 1955 to 1968, while clinics and pharmacies proliferated. This no doubt resulted in longer life-expectancy and lower infant mortality. On this point, Sihanouk’s reign succeed

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