<!-- Start of picture text --> sector)<br>Cambodia Cambodia<br>2007, 3.8 2007, 36.2<br>Cambodia 2003 Cambodia 2003<br>Th La ThLa<br>- 5.0 10.0 15.0 20.0 25.0 - 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0<br><!-- End of picture text --> _<u>Note: The box represents the 25</u>_<sup>_th_</sup> _and 75_<sup>_th_</sup> _percentiles of the distribution and the middle line the median. The extreme ends of the bar represent the minimum and maximum of the distribution. Cambodia’s performance in 2003 and 2007, and those of Lao and Thailand, are displayed._ _<u>Source: World Bank (2008d).</u>_ 41. **Electricity appears to be a binding constraint as evidenced by the high incidence of generator use and the high price of electricity** (Figure 14). The fact that almost no electricityintensive industries are in place also supports that conclusion.

42. **Transport and logistics capabilities are limited in Cambodia** . The costs of domestic and international shipping are high, despite some recent progress in trade facilitation. For example, shipping a dry, 40-foot container from Ho Chi Minh City to Singapore would cost approximately US$220, whereas the rate for a similar container from Sihanoukville to Singapore is around US$600. The cost of transport for agricultural products is US$15 per ton per 100 km, against US$7.50 in Vietnam and US$4 in Thailand. The efforts deployed by the garment industry to improve logistics and trade facilitation also demonstrate that this is an important constraint.

43. **Finally, there is strong evidence of a lack of self-discovery and coordination** .<sup>15</sup> Most value chains in Cambodia are simple (see above), reflecting the risk that a complex value chain, with coordination among many elements of the value chain, would represent. The survival rate of new exports – the proportion of new exports that are still exported after one or five years – is also low, reflecting either (i) that Cambodian exporters might be able to do one-time innovation (a positive sign), but are <!-- Start of picture text --> Figure 15: Cambodia tends not to sustain its new<br>flows of exports p<br>64% 62%<br>60% 58% 57% 56% 55% 51%<br>43%<br>40% 39% 37% 35%<br>20%<br>0%<br>After 1 year After 5 years<br>China Japan Korea Thailand Vietnam Indonesia Philippines Bangladesh Ghana Cambodia Cameroon<br><!-- End of picture text --> _<u>Note: the survival rate of exports measured the proportion of new export flows</u> that are still positive after one or five years. Source: ComTrade, Staff, based on data from Paul Brenton._ unable to sustain such innovation as they lack the capability to deliver on time, logistics, etc.; or (ii) that foreign importers are willing to try to source from Cambodia, but after one or few attempts realize the cost of doing business (Figure 15). Diversification is limited and the sophistication of exports has not improved much despite rapid growth (Figure 2). The lack of “nearby products” (based on an analysis of Cambodia’s product space) also suggests that Cambodia is exposed to problems of self-discovery and coordination.

> 15 Self-discovery is the process by which a country finds out “what it is good at”. It is a delicate process as it involves entrepreneurs taking risks, and potentially not being able to reap all the rewards of their investment (once they have found that something works in the context of Cambodia, it is likely to be replicated by others). Investing in new areas also requires the coordination of many inputs and policies, which is difficult to engineer, or is simply impossible when some inputs are missing (Hausmann and Rodrik, 2003).

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