CDRI Chief Economist Prof. Dr Matthew McCartney recently delivered a public lecture at the Preah Srey Içanavarman Museum (SOSORO), examining India and Cambodia's development experiences and highlighting key lessons for sustaining economic growth and overcoming middle-income development challenges.

While many comparisons of Cambodia are drawn from the ASEAN region, it can be instructive to step further away. India and Cambodia are both middle-income countries, with average incomes just below USD3,000, having enjoyed three decades of rapid economic growth that places them both in a small global club of successful economies. They had very different starting points. India in the 1970s and 1980s had a functional state, a large endowment of skilled engineers, and bad public policy that needed correcting, whilst Cambodia was emerging from a devastating, murderous interlude in the 1970s that laid waste to its state, economy, and educated citizenry. Relative to those starting points, Cambodia is the most striking success.

Thinking around the framework of the Middle-Income Trap (a big research and policy theme of CDRI) shows that both countries have been successful in driving from low to middle-income status by mobilising resources for development - in particular savings, investment, and literacy, but Cambodia has been better at getting women into the labour force. Female labour force participation in Cambodia (77%) is more than double that in India (32%).

To sustain economic growth, both countries are reaching the limits of mobilising ever more resources and need to switch to a productivity-led development strategy. Here, economic growth looks more sustainable in India going forward - India has much higher rates of domestic innovation as measured by patent applications and R&D spending, and manifests in a diversified export profile comprising pharmaceuticals, IT, engineering, and electronics.

The lecture drew out a number of big-idea policy implications - while India has a global diaspora excelling in knowledge-intensive sectors globally (10% of US doctors, for example, are Indian-origin), Cambodia has no such equivalent. But Cambodia is a far more open economy than India, which generates huge opportunities for learning and technology transfer through encouraging links with foreign firms, through seeing the return migrants from Thailand as an economic asset (bringing with them skills and experience in tourism and manufacturing), and through opportunities for establishing and expanding new global trade, investment, and tourism partners - here, India would be an excellent candidate.