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Concept
Economy of Laos
Summary
The economy of Laos is a lower-middle income developing economy. Being one of the socialist states (along with China, Cuba, Vietnam and North Korea), the Lao economic model resembles the Chinese socialist market and/or Vietnamese socialist-oriented market economies by combining high degrees of state ownership with an openness to foreign direct investment and private ownership in a predominantly market-based framework.
Following independence, Laos established a Soviet-type planned economy. As part of economic restructuring that aimed to integrate Laos into the globalized world market, Laos underwent reforms called the New Economic Mechanism in 1986 that decentralized government control and encouraged private enterprise alongside state-owned enterprises. Currently, Laos ranks amongst the fastest growing economies in the world, averaging 8% a year in GDP growth. It is also forecasted that Laos will sustain at least 7% growth through 2019 as well.
The key goals for the government include pursuing poverty reduction and education for all children, also with its initiative to become a "land-linked" country. This is showcased through the ongoing construction of the nearly $6 billion high-speed rail from Kunming, China to Vientiane, Laos. The country opened a stock exchange, the Lao Securities Exchange in 2011, and has become a rising regional player in its role as a hydroelectric power supplier to neighbors such as China, Vietnam and Thailand. In the current period, the economy of Laos relies largely on foreign direct investment to attract the capital from overseas to support its continual economic rigorousness. The long-term goal of the Lao economy as enshrined in the constitution is economic development in the direction of socialism by creating the material conditions to move towards socialism.
Despite rapid growth, Laos remains one of the poorest countries in Southeast Asia. A landlocked country, it has inadequate infrastructure and a largely unskilled work force.
Official source
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