The Influence of Foreign Direct Investment on Employment Development in Cambodia: A Lens on Manufacturing Industry

This study quantitatively analyzes the influence of Foreign Direct Investment (FDI) on employment development in Cambodia’s manufacturing sector, focusing on garments (CG), food processing (CF), and electrical/electronic assembly (CE) industries. It addresses three primary objectives: evaluating the extent to which FDI generates employment opportunities for local Cambodians, identifying the specific employment benefits derived from these investments, and examining the required qualifications and mechanisms of skill transfer within FDI-invested industries. Building on Kokko’s FDI spillover theory in 1992, this study utilized firm-level survey data (n=101) collected via proportional stratified sampling. Firms were categorized into three regions such as capital, border, and sea-port, based on economic corridors. The findings reveal that FDI drove significant employment growth (grew by 315% for all job classifications: general workers, operators, supervisors, technicians, and higher management), with CE and CG sectors outperforming CF. Wages exceeded national minimums across all job classifications, and robust non-monetary benefits (healthcare, accommodation) were prevalent. However, knowledge transfer was uneven: higher-level roles (technicians, management) received industry-specific technical training, while general workers saw limited skill development. Notwithstanding FDI's demonstrable positive impact on employment generation, the analysis identifies structural constraints, notably skills shortages and wage-productivity divergence. Mitigating these requires prioritized investment in TVET systems and institutionalized tripartite coordination for sustainable industrial development.