Economic growth in Cambodia came to an abrupt halt in 1997 as the domestic political crisis
and the external financial crisis took their toll. However, Cambodia has been comparatively
mildly affected by the Asian crisis and, provided that political stability can be achieved, there
are good chances that the economic decline in 1997 will become little more than a parenthesis.
A more fundamental development challenge facing the country is the very rapid increase
in the labour force as the large cohorts born in the early 1980s enter the labour market. A
major weakness in the economic development to date has been its narrow base. It has largely
been attributed to growth in the urban industrial and service sectors, while the performance of
agriculture has been rather lacklustre. The twin goals of productive employment generation
and poverty alleviation will require much more dynamic development of agriculture and of
the rural economy as a whole to succeed. Access to productive assets—i.e. land, physical and
human capital—and insecurity arising from the absence of the rule of law, are identified as
the factors with the strongest bearing on poverty.