Economic growth — practice question

At present, around 80% of Cambodia’s export earnings are generated from clothing sales. The Cambodian Government wants clothing producers to export more, although its immediate focus is to boost rice exports. In 2012 Cambodia ranked as the world’s seventh-largest rice exporter. The government wants the country to move into the top five. If export earnings rose above the 2012 figure of US$6 billion, the country’s current account deficit in its balance of payments would fall. To meet the government’s target, several changes are needed to raise Cambodia’s Gross Domestic Product (GDP). One is improving infrastructure, including the construction of additional roads and ports. Better transport infrastructure also has to be matched by greater investment in agriculture. In addition, farm workers’ skills need to be improved. Those who are already skilled should be encouraged to remain in the country rather than leave it. The Cambodian Government is also trying to increase investment in the manufacturing and service sectors. A variety of factors affect investment. Among the most significant is the rate of economic growth. Countries with rapid economic growth usually devote a large share of their income to capital goods. Cambodia is drawing investment from other countries, especially China. This investment is influenced by several factors, including a young population and progress in the country’s financial sector. In 2012 the population was 15 million, with the birth rate exceeding the death rate by 13 per thousand of the population. Emigration was greater than immigration, giving a net migration rate of minus 0.3 per thousand of the population. In 2012 Cambodia launched its first stock exchange, the Cambodian Securities Exchange (CSX). The first company listed on the CSX was the Phnom Penh Water Supply Authority. This Cambodian company is known as one of the most efficient water companies in Asia. It is a desirable employer partly because it offers relatively high wages.