Urbanization in Cambodia: Development and disparity

Sreypich Lay and Pechmonyleap Neang
Cambodian Education Forum
Phnom Penh, Cambodia


Urbanization contributes significantly to the development of a country. Notably, in both developed and developing countries, disparity among people in rural and urban areas has become a major concern in the process of urbanization. As the economic growth of Cambodia has risen considerably over the past few decades, Cambodians have increasingly moved to urban areas to seek job opportunities and better lives. Drawing on secondary sources, this article discusses the issues concerning urbanization, including development and disparity in Cambodia. The article argues that urbanization brings enormous economic growth but at the same time widens social and economic disparities among different stakeholders in Cambodia.

Keywords: Urbanization; development; disparity; Cambodia


Urbanization offers a high chance of employment to the citizens of a country. The share of the city population is booming to meet the demand for labor in urban-based industries, such as garment sectors, construction, manufacturing, tourism, services, and trade. According to the World Bank (2020), over half of the world’s population today dwells in urban areas, and this trend is expected to continue. The number of people living in the cities is expected to rise to 6 billion by 2045, equivalent to an increase of 2 billion urban inhabitants. It is also estimated that over 80% of the global GDP (Gross Domestic Product) will be achieved in urban areas (World Bank, 2020). Urbanization will contribute to sustainable growth if it is well managed by increasing productivity and promoting new ideas and innovation. According to Nguyen and Nguyen (2018), many countries have been urbanizing at their own pace, and the level and speed of urbanization vary from country to country based on the geographic region, size of the country, and level of development.

In the context of Cambodia, in the last two decades, the country has been implementing national policies to facilitate internal migration and ensure good basic services for the newly settled migrants, but coherence and proper implementation of policies are still lacking (Diepart & Ngin, 2020; Hing & Ly, 2014). As urbanization generates a lot of manual and blue-collar jobs, rural citizens are moving to towns and the capital city to seek a better life. This trend presents a dual potential for development and disparity, particularly among citizens in a developing country like Cambodia.

This article aims to highlight the relationship between urbanization and urban poverty. It begins by discussing issues around urbanization and urban poverty in general. It then elaborates on the issue of urbanization and economic growth in Cambodia, arguing that urban migration has led to both development and more inequality. The article concludes by offering a few key solutions to address the disparities in the urban areas of Cambodia.

The role of urbanization

Urbanization has been a key factor contributing to the development process throughout history (Bairoch, 1988). No country has achieved high levels of economic growth without urbanization (World Bank, 2017). Urbanization plays a critical role in the structure of society and economy of both developed and developing countries by offering opportunities for people to access educational services, health, and employment. Education capital determines a nation’s ability to develop new technologies and adapt existing technologies (Aghion & Howitt, 2019). Moreover, urbanization is an important contributing factor to business growth (Glaeser et al., 2010). As Nguyen and Nguyen (2018) noted, the concentration of enterprises and agglomeration of people in urban areas help reduce the costs of business transactions and production; moreover, it makes business easier in accessing finance and promoting business ideas with a larger market than in rural areas. Therefore, urbanization attracts more entrepreneurs and enterprises to do business in urban areas rather than in rural areas. There are also spillover effects of urban development on rural areas with the attraction of highly skilled and talented people to cities through migration. Consequently, manufacturing skills, technology, the transfer of information, and finance can be improved in areas where migrants have left.

Urbanization and urban poverty

Kuznets (1955) pointed out that a link between inequality and development is connected to the shift of population from traditional to modern activities. As he argued, “an invariable accompaniment of growth in developed countries is the shift away from agriculture, a process usually referred to as industrialization and urbanization” (p. 7). Ha et al. (2019) also argued that urbanization and economic growth are closely related. The process of urbanization affects income distribution that causes income inequality between people in urban and rural areas. Many cities around the world are disproportionately wealthy and are challenged by poverty and income inequality (Ha et al., 2019). As Liddle (2017) argued, the greater the level of urbanization, the more exacerbated the poverty and rural-urban gaps. Urbanization shows itself to be closely linked to both national economic performance and national development policies, which affects economic growth and income distribution among populations and creates poverty in towns and cities (Rakodi, 2014).

According to the UN-Habitat (2019), approximately 1.6 billion people globally do not have access to adequate housing, and 25% of the world’s urban population live in informal settlements where they lack access to basic services, education, and work opportunities. Moreover, in most developing countries, there are high levels of urban dwellers, most of whom live in slums, receive little basic services, and struggle with the hard life of contemporary urban ecosystems that are unplanned and haphazard (Arfanuzzaman & Dahiya, 2019).

Urbanization and economic growth in Cambodia

Due to the growth of population and rural-urban migration, Cambodia has been experiencing fast urbanization. In 2009, the urban population accounted only for 19.93%, but in 2019 the number reached a total of 23.83% (Statista, 2021). The population in Phnom Penh, the capital city, has increased from 1.1 million in 2000 to 2.1 million in 2021 (World Population Review, n.d.). Over the past decade, Cambodia’s annual GDP growth rate increased from $10.4 billion in 2009 to $27.09 billion in 2019 (World Bank, n.d.).

Furthermore, according to the Master Plan on Land Use, Phnom Penh will have expanded its radius by 100 kilometers, increasing its population to 6 million by 2035 (Castro, 2021). The goal is to accelerate Phnom Penh’s growth through green city development, particularly through the garment sector, real estate, and tourism.

According to Nathan (2014), most factories in Phnom Penh are owned by Chinese, Malaysian, and Korean nationals who invest in Cambodia due to cheap labor and favorable tax incentives. Their factories and products are the driving force behind the economic growth of Cambodia. However, while urbanization and economic growth have led to infrastructure development and well-equipped business facilities, only 24% of the Cambodian population have access to electricity, 31% to sanitation, and 64% to clean water (Nathan, 2014). Most hospitals and public schools which are accessible for the poor are understaffed, ill-equipped, and quality-deficient. Therefore, only the middle and upper classes can afford the western-styled hospitals and private schools (Nathan, 2014).

Urban migrants: Employment and well-being

Cambodia is fast urbanizing, just like other Asian countries. It is in a profound transition from an agrarian society to an urban one, as seen in the rapid migration of people from rural to urban areas. Gangopadhyay et al. (2020) noted that foreign direct investment flows have both short-run and long-run effects on urbanization and urban planning, encouraging economic migrants. Urban development in Cambodia creates jobs for manual labor workers, especially in the garment and construction industry. These sectors provide a significant source of income for urban migrants (Fay & Opal, 2000). As Ge et al. (2019) highlighted, there is a relationship between urbanization, labor migration, and agricultural transformation. They argued that urbanization drives agricultural transformation, village development, and rural human–land relationships known as “the city-rural power” in the push-pull theory.

Over the last 20 years, Cambodia has experienced rapid demographic changes, particularly in the city and provincial towns, with continued inflows of migrants from rural areas to towns and the capital city. These changes in population movements have led to increased investment in infrastructure and services to support the increased population (Fox et al., 2018). On a parallel note, urban migration has considerably improved the well-being and living standard of many households with elders as migrant workers earning more money to support their family back home (Jayanthakumaran et al., 2019). The International Monetary Fund and the World Bank (2013) pinpointed that internal migration in the country has helped to reduce poverty and boost better working conditions, indicating progress in the Millennium Development Goals.

However, some urban migrants live in filthy slums and suffer various forms of social disparities. In fact, the income gap between the formal and informal occupational sectors has widened due to urbanization (Jayanthakumaran et al., 2019). In other words, urban inequality has risen alongside the widening gap of income inequality. This inequality rises faster in urban areas than remote areas, and it mirrors total inequality between urban migrants and high-skilled populations (Miranti et al., 2013; Yusuf et al., 2014).

According to UNFPA (2014), most households dwelling in poor urban communities procure low-paid income in intensive-labor occupations in which up to 60% of the households earn less than 75$ per month. Moreover, they face health problems, including malnutrition and HIV/AIDs. Specifically, 83% of the poor urban communities were in debt contracts for their healthcare, food, business start-ups, childbirth, and children’s education. Manning and Miranti (2015) stated that factors behind this increasing inequality were associated with the fiscal policy and other national policies that do not successfully facilitate the demographic increase in urban migrants. It is also worth noting that with urbanization, there is increasing pressure on the demand for energy, social welfare, labor rights, remuneration, and sustainable infrastructure and energy use (Sadorsky, 2014).


The process of urbanization in Cambodia is closely bound with urban-rural development challenges and inequalities. Urbanization reflects the living quality, living standard, income distribution, and social service provision ; that is, the economic structure and condition of a country. Having gone through fast-faced urbanization, Phnom Penh inhibits many new internal migrants who are mostly employed in factories, informal businesses, and the construction sector. Urbanization introduces certain growth and provides opportunities to these people, but concurrently it induces many challenges and makes urban divides more visible.

Henceforward, reforms in the labor law and wage system, including the minimum wages and universal basic income, can help reduce the gap of economic disparities among the population. Thus far, the Cambodian government only excels in the national policies to raise the income of the garment workers; however, the percentage of wage increase is still quite insufficient compared to the gradual inflation in the market. Therefore, the wage increase should reflect inflation and market price. Moreover, the opportunities to receive public services, especially financial support, health care, sanitary system, and education, should be effectively and efficiently distributed to all urban residents.

Moreover, local officials, such as mayors and public officials, ought to embrace tackling inequality as one of the prioritized frameworks for development by addressing all three dimensions: economic, spatial, and social disparities. There are indeed no one-size-fits-all solutions to urban inequality. Therefore, as long as the government works hand in hand with all stakeholders, sets sights on addressing the urban issues with a clear vision, and solves the immediate challenges of the residents who live at the bottom of the ladders, urban poverty will be reduced, and social cohesion will be increased.


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The authors

Sreypich Lay is currently an intern at the Cambodian Education Forum. She is a senior student majoring in International Relations at Paragon International University. She is also a part-time intern serving as an international news reporter at Thmey Thmey. 
Email: sreypichlay123@gmail.com

Pechmonyleap Neang is currently an intern at the Cambodian Education Forum. She is a senior student pursuing an International Relations degree at Paragon International University. She is also working as an editor at Generation Z magazine and an academic assistant at her university.
Email: neangpechmonyleap@gmail.com


The authors would like to thank the editors of the Cambodian Education Forum, especially Mr. Kimkong Heng, Mr. Koemhong Sol, and Mr. Sopheap Kaing, as well as one anonymous reviewer for their editorial support and helpful comments on earlier versions of this article.

Cambodian Education Forum (CEF)  

Website: www.cefcambodia.com
Email: cef.correspondence@gmail.com
Facebook: www.facebook.com/CEF.Cambodia
Twitter: www.twitter.com/CEFCambodia     

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