Laos: Trade and Investment Profile
The Lao People’s Democratic Republic (Lao PDR) continues to develop rapidly, transforming itself into a lower-middle-income country, with a doubling of gross national income (GNI) since 2006. A resource-based production boom, fueled by hydropower development for energy exports and mining, has been an important driver behind the country’s accelerating growth. The country is now realizing the impacts from its investments in infrastructure, economic and social development, and from its outward orientation policies through regional cooperation and integration.
Robust growth and sound development have helped to nearly halve poverty. However, the economic transformation continues to pose challenges for the country. Continued structural transformation and economic diversification is needed to expand opportunities, provide jobs for a young population, and for growth to become more inclusive. At the same time, high economic growth will need improved natural resource and environmental management. The effects of a narrow resource-based growth path will need prudent management to avoid potential losses of export competitiveness in other sectors; and proactive reallocation of fiscal revenues from the booming resources sector for wider economic and social development. Climate change adaptation and mitigation will be needed to reduce risks to its natural resource- based economic sectors. Current high foreign direct investment highlights the increasing issues surrounding land tenure security and an influx of migrant workers. The Lao PDR is at an important crossroads in its development, and is challenged to balance growth with equity and sustainability to ensure that current and future generations can participate and benefit from economic growth.
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