Paper Example on Laos Economy

Published: 2021-06-30
941 words
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8 min to read
Middlebury College
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Laos is a landlocked country which is located in South Asian, and it is traversed by Mekong River, and it characterized with mountainous terrain. The country is one of the worlds remaining communist states and the poorest in East Asia. The country relies on agriculture, and more than 80% of the population live in rural areas. Lastly year, the countrys national assembly appointed Bounnhang Vorachit as the president four months after being picked as the leader of the ruling party (Lao People Revolution Party). The president has a strong tie with the United States, and Obama was the first Us president to officially visit the country in 2016 where they held a bilateral talk with the current president (BBC News,2017).

The countries map in Eastern Asia region


Laos map showing countries major cities


In the year 2016, there was a moderate GDP growth due to weak global trade, reduced prices in commodity and changes in weather that affected the agricultural sector which is the important industry in the country. However, the Lao remained on of the fastest growing economy in the Southeast Asian region. The country started its physical consolidation program in the year 2014. However, the fruits of the program were not realized due to reduced prices of metal and inefficient collection of tax. The government was not able to meet the set target of revenue collection, and as a result, there was the widening of fiscal deficit as compared to 2015 and this limited the projected target of fiscal stimulus in the year 2016.The country appears to import more as compared to what it exports and importation is increasing year by year as compared to exportation

Just like any other developing countries, Lao majorly depend on agricultural sector as the backbone of the country. The sector employees more that 80% of the total workforce and accounts for more thaN60%of the GDP. In some regions, 905 of the people are employed by the sector and this show how the sector is essential to the country. The weaknesses of the sector are that people practice substance farming as the crops are mainly grown for consumption purposes, and hence the country cannot export some of its product.

Another important sector is tourism which is the fastest growing sector in the country at the moment. The sector holds the potential of promoting the economic growth and reduces poverty as the country has the highest rate of poverty. The government continues to concentrate on community-based tourism an initiative that is designed to reduce the rate of poverty. However, the tourism sector has some challenges since it appears to be small as compared to the tourism industry in other regions. Another sector is service sector which accounts for 27% of the GDP. However, the sector the sector has some weakness as it, employees, only 9% of the workforce (Laos Economy,2017).

As cities and population are growing, more land is the need in Laos, and this poses an environmental risk. Most of the forest that are being destroyed are rain forest which is one of the most biologically adverse ecosystems on earth. This will have a long-term negative effect on the economy in such a way that the land that is being brought under agriculture will lack enough water in future and this will affect the entire agricultural sector. Another problem is increasing endangering of species such especially elephant which remains a major issue in East Asia. Ivory poaching is on increase and this drastically affected the tourism sector which contributes to the economic growth (Matt,2014)

Laos will face a different challenge in years to come, and one of this challenges is water security. The East Asia regions rely on Himalayan Glaciers which is the source of many rivers in the region. Due to global warming, and rivers such as the Mekong are already dammed. The country will face a freshwater shortage in the coming years especially if the current global warming continues.

Most of the people currently live in rural areas, and rural, urban migration is on the rise in Laos. Such shift comes with various environmental risk especially if there will be no proper policies are put in place. In the coming years, most of this cities will be overcrowded and this might result in poor sanitation, poor housing as the country is not economically stable enough to handle such pressure and all this pile pressure on the environment. With the current deforestation due to an expansion of these cities, Los and other East Asian countries will face drought. And changes in climate that will not support the current agricultural sectors. Furthermore, the city dwellers appear to consume more food and goods as compared to those in rural areas. As a result, it will put more pressure on resources.

In the next five years, the countrys economy is expected to grow by more than 10 percent. Most people are moving away from subsistence farming into commercial, and this will boost the countrys economic growth. Also, more industries are coming up, and this is the reason why people are moving in urban areas. The industry will enhance economic growth as they will increase the rates of the transaction within the economy and this facilitates money circulation.


Laos Country profile - BBC News. (2017). BBC News. Retrieved 9 May 2017, from

Laos Economy: Population, GDP, Inflation, Business, Trade, FDI, Corruption. (2017). Retrieved 9 May 2017, from

Matt H., (2014)6 environmental challenges facing Southeast Asia (and what you can do to help), retrieved from

Menon, J., & Warr, P. (2013). The Lao economy: Capitalizing on natural resource exports. Asian Economic Policy Review, 8(1), 70-89.


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