Effects of Garment Factories on Household Welfare: A Case Study in Rural Cambodia

Abstract

In Cambodia, manufacturing is the leading sector, and the garment and shoe industries are particularly important as they continue to expand. Nowadays, they operate not just around Phnom Penh, the capital city, but also in the provinces. Newly built factories create non-agricultural job opportunities for people in rural areas, which may affect their income and/or lifestyle. The objective of this study is to explore the effect of building and operating garment factories near rural villages on household well-being in Cambodia. The estimation results of a panel data analysis revealed that the existence of a garment factory is positively associated with work opportunities for women in the non-agricultural sector and the health status of household members. However, factory operation is likely to have an adverse effect on girls’ education.