From clothing to productive rice: Do the migration and spending patterns of Cambodian garment workers show signs of a trickle-down effect?

Abstract: Cambodia suffers from a large rural-urban gap. Given agricultural underemployment a Lewisian perspective on economic growth can be applied, with the secondary sector being the garment industry in Phnom Penh. It provides employment and domestically high wages to a quarter of a million rural women who remit large shares to their families. The post-quota system era now poses a threat to the industry and any income linkage is at risk. This thesis, surveying garment workers and rural households, aims to answer whether there is a trickle-down effect from garment workers to other sectors, particularly to rural agriculture. Such knowledge would be valuable for assessments of the implications of an anticipated industry downturn in the years to come. Findings include that substantial investments are made into migration and that migrants cannot belong to the poorest households. It is difficult to identify significant urban consumption linkages. Remittances however seem to contribute to productivity raising investments, thereby showing potential for spurring the trickle-down necessary for poverty reduction in the rural areas. The findings suggest that an expansion of rural non-farm employment might be beneficial and it should be noted that a higher garment industry wage is likely to spur Lewisian savings and investments.