Trade and Investment Cooperation Between Cambodia and Vietnam: Visible Progress and Hidden Issues

Abstract

For a long time, geographically close countries were economically isolated from each other due to political factors, neglecting the obvious advantages of mutual cooperation. However, over the past two decades, the economic component has become the cornerstone of bilateral relations. Cooperation between Cambodia and Vietnam is developing dynamically and has a positive impact on the development of the economies of both countries. An increase in bilateral trade helps not only to meet the needs of the population and expand the sales market for products, but also to strengthen the export potential of Cambodia and Vietnam on the world market, what is more the latter at the expense of the former. There has also been an increase in intra-industry trade in recent years, indicating the beginning of vertical integration, taking into account identified comparative advantages. An important role is also played by Vietnam’s implementation of investment projects that fill empty niches, create the necessary infrastructure, make a significant contribution to socio-economic development, social security, stimulate the growth of budget revenues, and also create jobs in Cambodia. Vietnam has emerged as one of Cambodia’s most important trade and investment partners, increasing its presence in the neighboring market and playing an important role in the country’s development. Cambodia’s economy is booming, thanks in large part to developments in Vietnam’s (and, of course, China’s) sphere of influence. This confirms the theory of the benefits of flying “with a flock of geese.” Vietnam is historically and mentally inclined to help Cambodia through this influence, and apparently does not represent another model of relations. At the same time, there are also negative aspects of cooperation, such as inequality of trade and investment flows, Cambodia’s growing economic dependence on its neighbor, and weak integration. The study of the main aspects of Vietnam’s economic influence on Cambodia has become increasingly relevant in recent years. At the same time, the issue of Cambodian-Vietnamese trade and investment interaction has been poorly studied.