Future growth model of Cambodia.

The OECD warns that new technologies can only generate sustained gains when supported by the right policies. OECD

#OpEd

The global growth story is changing. For many years, countries could rely on familiar engines of expansion: cheap labour, rising employment, low-cost production, and steady integration into global markets. That era is fading.

The latest OECD report argues that the foundations of growth are under strain across many economies, with slower labour productivity growth driven by weak business investment, declining firm dynamism, slower technology diffusion, and a weaker pace of human capital accumulation.

At the same time, geopolitical shocks, trade disruptions, and rapid technological change are reshaping the global economic landscape.

Yet the report also points to a major opportunity: artificial intelligence and digital technologies could unleash a new wave of productivity growth, but only if countries put in place the right structural policies.

It argues that sustainable prosperity rests on strong enabling conditions: high-quality human capital, sound institutions, effective governance, reliable infrastructure, affordable and secure energy supplies and macroeconomic stability.

The findings matter for Cambodia.

Our economy has made remarkable progress over the past two decades. But the next phase of national development will require a new growth model.

Cambodia cannot depend forever on extensive growth driven mainly by labour expansion, low wages, and external demand.

The future belongs to economies that can raise productivity, strengthen resilience, modernise institutions, and move up value chains.

Growth must be more durable, innovation-driven, environmentally responsible, and socially inclusive. That is the central lesson Cambodia should draw from the OECD’s latest reform agenda.

The first pillar of a future growth model is human capital.

The OECD rightly emphasises that strong skills systems and lifelong learning are among the most frequent reform priorities across countries, especially as AI and digitalisation reshape production and business operations.

In a world where technology evolves rapidly, workforce adaptability becomes a decisive competitive advantage. For Cambodia, this means investing more seriously in education quality, technical and vocational training, digital literacy, management capability, and industry-relevant higher education.

It also means building stronger links between universities, training institutes, and the labour market so that graduates are prepared not for yesterday’s economy, but for tomorrow’s.

Countries that fail to upgrade skills will struggle to absorb new technologies. Countries that do so well will attract better investment and create higher-quality jobs.

The second pillar is productivity through innovation and technology adoption.

AI, automation, and digital tools can help improve productivity in manufacturing, logistics, agriculture, education, finance, and public administration. But technology on its own is not enough.

The OECD’s warning is clear: new technologies generate sustained gains only when supported by the right policy environment.

Cambodia therefore needs a practical innovation strategy that promotes adoption and integration of cutting-edge technology.

Public support for research and development, stronger university-industry collaboration, support for startups and SMEs, and incentives for firms to digitalise their operations are essential.

Innovation policy should become a core economic policy.

The third pillar is institutional modernisation.

Strong institutions, predictable regulations, and efficient governance are core economic assets.

The OECD stresses that institutional quality and efficient regulatory processes foster trust, reduce uncertainty, improve resource allocation, and strengthen market incentives.

For Cambodia, this should translate into a determined effort to build a strong, clean, and smart state.

Reducing leakages, fighting corruption, streamlining procedures, and digitising public services are productivity reforms.

Investors, entrepreneurs, and citizens perform better when rules are transparent, implementation is consistent, and the cost of compliance is low.

Clean institutions are critical to economic productivity.

The fourth pillar is smarter structural reform.

The OECD report makes an important point: enabling conditions alone are not sufficient. Markets must function well to promote competition, business dynamism, investment, and technological diffusion.

When these forces weaken, governments must reduce unnecessary regulatory barriers and improve the policy environment for enterprise growth. This lesson is highly relevant to Cambodia.

We need regulatory support in promoting green energy, the digital economy, SMEs, and export-orientated industries.

Product market reforms, better insolvency frameworks, and more efficient licensing and compliance systems can encourage investment and allow more productive firms to grow.

Broadening the tax base, improving government efficiency, and reducing distortions in the tax system can also reinforce both fiscal sustainability and long-term growth.

Structural reforms should not be seen as isolated technical fixes. They must be designed as a coherent, systemic package.

The fifth pillar is better use of national resources and stronger economic connectivity.

Cambodia must optimise the use of its financial, human, institutional, and natural resources.

This requires more disciplined public spending, stronger fiscal management, and a sharper focus on productivity-enhancing investments.

Infrastructure should support national economic connectivity, linking provinces, producers, markets, and logistics systems more efficiently.

At the same time, Cambodia should work to deepen domestic value chains so that more value is created locally before being connected to regional and global production networks.

National resilience will be stronger when domestic capabilities are stronger. A country that is better connected internally will also be better connected externally. That is how Cambodia can turn geography into a strategic asset.

Human capital reforms work better when product markets are competitive. Innovation support works better when institutions are clean and capable.

Fiscal sustainability is easier to maintain when growth is stronger and public administration is more efficient.

Cambodia stands at an important development crossroads.

The next growth model cannot simply be a continuation of the previous one. It must be based on higher productivity, stronger human capital, innovation-led enterprise, better institutions, fiscal sustainability, and deeper economic connectivity.

In short, Cambodia needs a growth model that is smarter, cleaner, and more resilient.

The goal is to build a capable state, a competitive economy, and an inclusive society that can thrive in a fragmented, turbulent world.

The countries that succeed in the coming decade will be those that prepare early, learn fast, reform coherently, and invest in state modernisation and an innovation-driven growth model.

-Khmer Times-