MONGABAY.COM
Mongabay.com seeks to raise interest in and appreciation of wild lands and wildlife, while examining the impact of emerging trends in climate, technology, economics, and finance on conservation and development (more)
WEEKLY NEWSLETTER
|
|
Laos
Index
Detail from a Red Tai textile, with a spirit figure and a
naga (mythical snake or water dragon, associated
with the rains and rivers) performing a healing-and-spirit-
appeasing ceremony; a naga almost forms the shape of a
boat
IN THE EARLY 1990s, the Lao People's Democratic
Republic (LPDR,
or Laos) was among the ten poorest countries in the world,
according to a
World Bank (see Glossary)
ranking, with a per capita
gross national product
(GNP--see Glossary) in 1991 of just
US$200.
Its labor force is poorly trained and educated, its
infrastructure
severely damaged from years of inadequate maintenance, and
its
ability to feed itself precariously dependent upon the
weather.
Development expenditure is financed almost entirely by
foreign aid,
and, by 1991, exports financed only 40 percent of imports.
By the
beginning of the 1990s, however, Laos, while still an
impoverished
country highly dependent on foreign aid for its
development, had
taken some essential steps toward a free-market economy.
Despite the many obstacles to economic development that
remained in the early 1990s, however, in little more than
a decade,
starting in 1979, the government had deliberately shifted
the focus
of its economic policy away from socialist goals and has
made great
strides. Many state-owned enterprises, which had been
draining the
nation's treasury through subsidies, were privatized, and
tax
collection was boosted tremendously, helping to bring the
fiscal
deficit under control. Liberal laws on foreign investment
and trade
were passed, precipitating a surge of investment activity.
Prices
of many commodities were freed from government controls,
domestic
transport restrictions were lifted, and the cooperative
farming
system was ended.
The Seventh Resolution, passed at a plenary session of
the
Central Committee by the ruling Phak Pasason Pativat Lao
(Lao
People's Revolutionary Party--LPRP) in late 1979, marked
the start
of the country's shift toward a market-oriented economy.
The
resolution affirmed the government's commitment to begin
to open to
a market economy, as the necessary path to economic
development.
Since its inception in 1975, the government, in theory,
has
recognized private property and private enterprise.
However, they
were not encouraged, and, in fact, the provincial
governments of
Louangphrabang (Luang Prabang) and Phôngsali abolished
private
trade and traders through 1987. The objectives of the
First FiveYear Plan (1981-85) included self-sufficiency in food
production,
defined as the equivalent of 350 kilograms of paddy rice
and other
foodstuffs per capita per year, and the collectivization
of
agriculture. The plan also focused on developing
industrial
activity, increasing trade with Thailand, improving the
shattered
rural infrastructure, and increasing export revenues, all
goals
that received much greater attention as the tentative
steps toward
a market-oriented economy continued.
However, growth during the plan period was slower than
had been
anticipated, and the government decided to take bolder
steps toward
reform. At the Fourth Party Congress in 1986, the Second
Five-Year
Plan (1986-90) was endorsed, and new national development
strategy
was introduced. The New Economic Mechanism, as this
program was
called, was designed to expose the economy to world market
forces
gradually, without sacrificing the nation's goal of food
selfsufficiency . To implement this plan, many facets of the
economy
were decentralized. Although the central authorities
continued to
set policy guidelines, responsibility for administering
and
financing many programs for economic and social
development was
delegated to the provinces. About a year after the
congress, the
new policy was promulgated into regulations, and changes
became
rapid and extensive.
The second plan also sought to encourage foreign and
private
investment. Among the reforms called for under the New
Economic
Mechanism were the lifting of numerous trade regulations
and the
creation of opportunities for foreign investment. In a
major shift
from its economic dependency on Vietnam, Laos began to
look toward
Thailand--and, later, toward other socialist
countries--for private
investment, technology transfer, and trade. Through the
improvement
of transportation and communications systems,
encouragement of the
private sector, and development of the agroforestry
industrial
processing sector, it was hoped that nonfood imports could
be
reduced and exports increased, thus improving the balance
of
payments. Although Laos showed an overall balance of
payments
surplus in 1985 and 1986, the current account deficit had
been
increasing, and during those years exports financed less
than 30
percent of imports. The government took a new interest in
environmental protection and sought to limit the practice
of
swidden, or slash-and-burn cultivation as a means of
protecting its
forest resources and encouraging cash cropping. It proved
difficult, however, to bring about such a change because
of
negative effects on upland farmers' livelihoods.
Traditional
swidden agriculture does not adversely affect forest
resources to
the same extent that commercial exploitation does.
Many reforms were carried out successfully during the
late
1980s, but the Second Five-Year Plan ended with economic
performance lagging well behind planned achievements. Not
least
among the disappointments was the need to import rice
during the
droughts of 1987 and 1988, underlining the fact that an
objective
identified over ten years earlier--sustained
self-sufficiency in
food--had not been met.
Despite economic failures, however, the Fifth Party
Congress,
held in March 1991, reaffirmed the government's commitment
to the
development of a market-oriented economy. The Third
Five-Year Plan
(1991-95) proposes a "strategy" that aims to continue
progress made
under the previous two plans: improving the country's
infrastructure, promoting exports, and encouraging importsubstitution industries. In August 1991, the Supreme
People's
Assembly (SPA) approved a new constitution--the first
since the
previous constitution was abolished in 1975
(see The Constitution
, ch. 4). Among its provisions is the affirmation of the
right to
private ownership; the words "democracy and prosperity"
replaced
"socialism" in the national motto.
Data as of July 1994
|
|