Development in Economics in Laos Grade 12 Economics case study

1. Overview of Laos

Laos, one of the few communist states, is regarded as a developing country that started encouraging private firms. Laos is one of the fastest economic growth rate among the developing Asian countries. From 1988 to 2008, the economic growth rate was around 6% per year and recorded 8% through the last decade. Located between Thailand and Vietnam with the Mekong river, Laos is heavily capital intensive in their natural resources. Nevertheless, Laos remains with underdeveloped infrastructure, especially in rural areas, but is improving with road systems and with limited external and internal land-line telecommunications. Electricity is accessible up to 83% of the population and 25% of GDP and 73% of employment heavily relies on rice agriculture.

Life expectancy of Laos and Korea compared with time

2. Comparing Development

Compared to the life expectancy rate in the UK, Lao has a much lower life expectancy rate. However, as the income per person increases, it is apparent that the life expectancy rate increases together.
Also, compared to the UK, which is relatively a much more developed country (this can be determined by the GDP per capita axis), has a much lower child mortality rate than Laos has. With time, as the economy develops and the GDP per capita increases, the child mortality rate decreases, indicating that the economic growth lead to an improvement in general health.
Back in the 1800s, the UK and Laos used to have the similar number of babies per woman. However, as the UK encounters the industrial revolution and their standard of life improves, the number of babies per woman decreases by a rapid rate. However, Laos still has a higher babies per woman rate, because most of the rural individuals are undereducated about pregnancy and family planning, there is a high rate of child, infanta mortality rate, and more labour force is required in an agricultural society. However, as the economy grows with the GDP per capita increased and more people are educated, the number of babies per woman decreases.

3. Domestic factors leading to Economic Growth

Improving national resource management to ensure sustainability

Although GDP per capita from the 1990s to 2011 doubled, the Lao government is seeking for methods to move toward a more sustainable, inclusive growth.

Mining and hydropower largely contributes to economic growth. Mining used to contribute 9% of GDP around 2006-2011 period. However, the economy is more moving towards hydropower because the government cannot solely depend on mineral mining. Hydropower is set to grow over three times to GDP growth between 2014 and 2020.

Develop transport infrastructure to speed up rural development

The government is putting much effort to improve physical infrastructure. The government has introduced regional and subregional infrastructure development projects, especially under the ASEAN framework and in the Greater Mekong Subregion and Triangle development Area. In the current state, transport infrastructure and telecommunications are prime focus of development areas.

4. The role of International Trade in Economic Development


Created with images by danou_info - "Pha That Luang, Vientiane, Laos I" • Fredrik Thommesen - "Golden Mekong"

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