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The Lao Economy: Capitalizing on Natural Resource Exports


  • We are grateful to Anna Cassandra Melendez and Ramesh Paudel for excellent research assistance. Comments of Southea Oum, Hal Hill, and other participants in the Japan Center for Economic Research symposium are gratefully acknowledged. The views expressed in this paper are those of the authors and do not necessarily reflect the views and policies of the Asian Development Bank, or its Board of Governors or the governments they represent.
  • Note: Correction added on 16 May 2013 after first publication online in Asian Economic Policy Review Volume 8, Number 1. The article title has been corrected to read “The Lao Economy: Capitalizing on Natural Resource Exports”.

Correspondence: Peter Warr, Arndt-Corden Department of Economics, College of Asia and the Pacific, Australian National University, Canberra, Australia. Email:


Trade and investment reforms in Laos since the mid-1980s have boosted natural resource-based exports, underpinning recent economic growth. A high proportion of the proceeds from these exports accrue directly to the government. Over the 8 years preceding 2011, total government revenue increased from 11% to over 19% of gross domestic product, due almost entirely to revenues derived from mining and hydropower. The effect on the Lao people depends on how the government uses these revenues. This paper examines how Laos' export-led growth can be channeled into directions that deliver the greatest benefit to the Lao people.