Handbook on Small Nations in the Global Economy
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Handbook on Small Nations in the Global Economy

The Contribution of Multinational Enterprises to National Economic Success

Edited by Daniel Van Den Bulcke, Alain Verbeke and Wenlong Yuan

This unique, extensive Handbook illustrates that multinational enterprises can contribute substantially to the competitive advantage of small countries. It advances the notion that small nations increasingly need to rely on both home-grown and foreign multinational enterprises to achieve domestic economic success in industries characterized by international competition.
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Chapter 11: The Competitive Position of a Developing Economy: The Role of Foreign Direct Investment in Cambodia

Ludo Cuyvers, Reth Soeng and Daniel Van Den Bulcke


1 Ludo Cuyvers, Reth Soeng and Daniel Van Den Bulcke Firms serve markets outside the boundaries of their home country by exporting their products, licensing their technology, or engaging in international production abroad through foreign direct investment (FDI). The existing literature provides a series of reasons for such outward FDI, e.g. that the investing firms possess specific ownership advantages over the indigenous, local firms that they want to exploit, or they want to tap into local resources that are unavailable or relatively more expensive in their own countries. This chapter reviews Cambodia’s inward FDI and the role that FDI has played in its economic growth and the expansion of exports in a competitive environment. Based on previously unpublished data from the Council for the Development of Cambodia (CDC)/Cambodian Investment Board (CIB), inward FDI flows into Cambodia are categorized into two main types – approved FDI and realized or active FDI. Approved FDI consists of the investment projects that have received approval from CDC, while realized or active FDI refers to the investment projects that have become operational following approval from the CDC or CIB.2 The chapter is organized as follows. In the second section, a short overview will be given of the relevant economic and business environment for FDI in Cambodia. Using unique data, FDI in Cambodia is then analysed by geographic origin, by ownership categories, by industrial sectors, by provinces, and by distinguishing between approved and realized FDI. The role of FDI in Cambodia’s economic development and the competitive...

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