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WEEKLY NEWSLETTER
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Laos
Index
By the start of the 1990s, Laos had obtained some
impressive
results from the implementation of economic reforms under
the New
Economic Mechanism. The experiment in cooperative farming
had ended
as an ideological failure, and although rice harvests had
reached
self-sufficiency levels, they still depend to a large
degree on
favorable weather conditions. New decrees guarantee
farmers the
right to long-term use and transfer of property. In
response to the
encouragement of the manufacturing and services sectors
through
privatization, investment promotion, and other means,
these sectors
have slowly begun to supplant agriculture's share of GDP.
The
private retail sector has blossomed. Removal of
restrictions on
interregional transit and improvement of foreign relations
with
Thailand have fueled growth in the transport subsector,
simplified
trade activities, and are likely to reduce the prices of
many
goods. The potential for tourism as a foreign exchange
earner has
brightened as foreign investors join with Laotian
companies to
provide improved aviation and tourism services. The
opening of the
Friendship Bridge between Thailand and Laos symbolizes the
new
relationship with countries outside the former Soviet
bloc: trade
with and aid from both developed and neighboring countries
have
increased. Despite an inflationary surge in the late
1980s, the
reduction of credit to money-losing state-owned
enterprises and a
tight monetary policy helped to bring inflation down to
more
manageable levels in the early 1990s. Tax reform has also
worked to
slow the increase in the fiscal deficit.
Despite these successes, however, many of the troubles
that
saddled Laos at the beginning of the 1990s remain. Perhaps
the two
most crucial constraints continue to be a poorly educated
and
trained labor force and a limited, poorly maintained
transportation
network with endemic problems. Many of Laos's most
experienced and
educated citizens had fled the country in the late 1970s,
and the
poorly run and underfunded educational system is
inadequate to make
up for this important loss of managerial and technical
skill.
Similarly, insufficient investment in operations and
maintenance
over the years has resulted in a road system poorly
equipped to
handle the increased traffic that liberalization
precipitated.
Without a better educated and trained labor force and an
improved
infrastructure, measures to increase foreign investment
and
encourage export-oriented production are not likely to
yield
sustainable economic progress. Even the push to privatize
stateowned enterprises and encourage efficient, profit-oriented
production depend upon the availability of trained
managers to
direct production. Thus, the sustainability of reforms
implemented
by the start of the 1990s depends, at least in part, upon
the
ability of the government to turn its attention to the
long-term
infrastructure and human capital requirements of a
market-based
economy.
* * *
Writing about the LPDR economy presents special
challenges
because the measurement of crucial variables such as
population,
size of the labor force, GDP, trade and aid flows, and
other
economic indicators differs from source to source. In
addition,
information is often out of date; most of the few
important books
that cover the economy, such as Martin Stuart-Fox's
Laos:
Politics, Economics, and Society, were published
before the New
Economic Mechanism was introduced.
Among the most useful sources available are various
World Bank
publications, including World Tables, and
especially
Historically Planned Economies, A Guide to the
Data, as well
as the IMF's Balance of Payments Statistics
Yearbook.
Frequently conflicting statistical information is given in
such
publications as the Organisation for Economic and
Co-operation and
Development's Geographical Distribution of Financial
Flows to
Developing Countries, and the UN's The Least
Developed
Countries Report. Three extremely useful publications
with a
wide variety of statistics that frequently coincide with
those of
other sources are the UN's Statistical Yearbook for
Asia and the
Pacific and Economic and Social Survey of Asia and
the
Pacific, and the Asian Development Bank's Asian
Development
Outlook. Of these publications, the first is perhaps
the only
up-to-date publication with reasonably detailed sectoral
and
production time series. For a more historical perspective
on the
growth of various economic sectors, the Asian Economic
Handbook and the Laos government's 10 Years of
SocioEconomic Development in the Lao People's Democratic
Republic
are very informative, if not always in agreement with
other
sources.
For information on specific sectors, a number of
publications
provide very useful data. The World Resources Institute's
World
Resources statistical tables contain otherwise scarce
information on forestry and agricultural activities,
deforestation,
energy, and pollution. Two publications are indispensable
for
information on trade and investment: the UN's Traders'
Manual
for Asia and the Pacific: Lao People's Democratic
Republic, and
Laurence J. Brahm and Neill T. Macpherson's Investment
in the
Lao People's Democratic Republic. A collection of
papers from
the Asian Development Bank and the Thai-Canada Economic
Cooperation Foundation's Thai-Lao Forum on Investment and
Trade
Opportunities in Lao PDR provides some excellent
sectoral
background information.
A number of excellent, although brief, surveys of the
economy
are available, including Martin Stuart-Fox's article "Laos
in 1991:
On the Defensive" and the section on Laos in The Far
East and
Australasia; the latter publication also contains some
useful
statistical tables. For the most wide-ranging, up-to-date
information, the Economist Intelligence Unit's Country
Profile and Country Report series for Indochina
are
essential; also Asian Survey's annual summary and
the annual
Asia Yearbook series. The increase in foreign
investment in
Laos and the general upswing in private activity in the
marketplace
may result in the dissemination of more accurate,
comprehensive,
and timely information about the economy. (For further
information
and complete citations,
see
Bibliography.)
Data as of July 1994
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