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3. Subregional Connectivity in the Lao PDR: From Landlocked Disadvantage to Land-linked Advantage
- ISEAS–Yusof Ishak Institute
- Chapter
- Additional Information
3 SuBregionaL connectivity in the Lao pdr From Landlocked disadvantage to Land-linked advantage Oudet Souvannavong The Lao People’s Democratic Republic (Lao PDR) is a landlocked country in Southeast Asia surrounded by the People’s Republic of China and Myanmar to the north, Thailand to the west, Vietnam to the east, and Cambodia to the south. The country has a large area of 236,800 square kilometres, a population of 6.6 million inhabitants, and a very low population density of twenty-five persons per square kilometre. The country is mountainous in the north and the east, and has in the west a number of plains along the Mekong River. The Mekong River and its tributaries are the main water sources that provide abundant natural resources with high socio-economic development potential for agriculture, forestry, fisheries, hydropower, and mining. In addition to those resources, the country has large ethnic diversity and an ancient Lao cultural heritage. Despite its natural and cultural resources, the Lao PDR has a number of constraints that hamper economic development, such as large mountainous terrain, remote settlements, low population density, and widespread poverty. The country is one of the least-developed countries (LDC) because of its underdeveloped physical infrastructure and human resources, its largely non31 32 Oudet Souvannavong monetized economy, and undeveloped public administration and governance frameworks, which have resulted in institutional and regulatory deficiencies that are posing problems and challenges to development. In the late 1980s the Government of the Lao PDR (GoL) introduced New Economic Mechanisms that aim at reforming public governance from a centrally planned economy to a market oriented economy.Trade liberalization is one pillar of economic reform and this has been accelerated when the Lao PDR joined the Association of South East Asian Nations (ASEAN) in 1987 and agreed to the ASEAN Free Trade Area (AFTA) in 1997. The desire of the government is to develop the country’s unfavourable landlocked situation into an effective land-linked position by leveraging the growing market of the neighbouring countries forming the Mekong River subregion of ASEAN and East Asia. In 1992 the Lao PDR joined a programme of economic cooperation that aims to promote development through closer economic linkages in the Greater Mekong Subregion1 (the GMS Programme). The GMS Programme, with support from the Asian Development Bank (ADB) and other donors, supported the implementation of high-priority subregional projects in transport, energy, telecommunications, the environment, human resource development, tourism, trade, private sector investment, and agriculture. One of the main components of the GMS Programme is the development of Economic Corridors that would entail integrating infrastructure development with other economic opportunities. These include trade and investment and efforts to address social and other impacts arising from increased connectivity. This chapter highlights the Lao PDR’s economic situation right after the global financial crisis and economic downturn of 2009 and the country’s potential and challenges for regional economic integration, especially within the GMS and East Asia. economic and SociaL conditionS The Lao PDR remains one of the least-developed countries (LDCs) in the world, with life expectancy at birth of 53.1 years, an adult literacy rate of 47.3 per cent, and a human development index of 0.476 in 2005. The ultimate goal of the government is to eradicate poverty and move the country from the list of LDCs by 2020. Since 1992, the GoL has embarked on large poverty reduction programmes that have resulted in the reduction of its poverty incidence from 45 per cent in 1992, to 26.8 per cent in 2008. According to the Lao Expenditures and Consumption Survey (LECS) (Figure 3.1), the poverty ratio decreased from 11 (LECS 1992/93) to 8 (LECS 2002/03). [44.200.145.114] Project MUSE (2024-03-28 10:06 GMT) Turning Lao PDR’s Land-locked Disadvantage to Land-linked Advantage 33 The proportion of its population below the food poverty line reduced from 32.5 per cent (LECS 1997/98) to 19.8 per cent (LECS 2002/03). The LECS further indicates that the dietary patterns are different in rural and urban areas. This shows that there are large development disparities between urban and rural areas. In rural areas rice is the main component of household meals. Consumption of meat and fish is high, as well as the consumption of non-timber forest products (NTFP), which is the main source of food in the rural areas. In urban areas there is an increase in transport and communication...