Abstract
Vilavong assesses how well the Lao economy has performed and what the country needs to do to integrate into the ASEAN Economic Community (AEC). While economic progress has been impressive, the resource sector remains the main driver of the Lao economy. The chapter highlights that sustaining the country’s long-term growth and development requires not only a strong political commitment to further reforms but also effective integration into the region. Vilavong concludes that apart from upgrading transport infrastructure, particular focus should be on further reforms to improve the poor business environment and logistics performance. These efforts can help Laos reap benefits from economic integration and ensure a smooth transition after graduating from the least developed country status.
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Notes
- 1.
A country is eligible for LDC graduation if it meets the thresholds for two of three criteria: income per capita, human development assets (such as health and education), and economic vulnerability (MOIC 2012, p. 47).
- 2.
Other areas include liberalising investment, harmonising a capital market regulatory framework, facilitating skilled labour mobility, promoting a regional framework in competition policy, consumer protection and intellectual property rights, promoting connectivity, and the narrowing development gap.
- 3.
According to an interview with an official at the Foreign Trade Policy Department.
- 4.
These include Australia, China, Japan, India, New Zealand, and South Korea. Negotiations have been ongoing to consolidate these agreements into the Regional Comprehensive Economic Partnership (RCEP) arrangement.
- 5.
As an LDC, Laos has been granted preferential market access by over 44 countries. First, the Generalised System of Preferences is granted by Australia, New Zealand, Canada, the European Union, Norway, Switzerland, Japan, Turkey, and Russia, among others. The second scheme is known as the Special and Preferential Treatment Scheme, including those granted by China and South Korea (Douangboupha et al. 2007, p. 35).
- 6.
See further discussions in Varela et al. (2016, p. 31).
- 7.
According to the World Bank’s World Development Indicators, based on the Atlas method at current prices.
- 8.
While economic growth is expected to ease to 6.6% in 2018, it is projected to pick up slightly during 2019–2020 and get towards a more sustainable level (World Bank 2017b, p. 31).
- 9.
According to the United Nations Commodity Trade Statistics (UN Comtrade) database, using data reported by partners.
- 10.
By comparison, Cambodia and Myanmar were ranked at 131st and 170th, respectively.
- 11.
Laos’ score was combined from individual components: the size of government (8.51), legal system and property rights (5.98), sound money (7.35), freedom to trade internationally (6.74), and regulation (6.31). See Fraser Institute (2016).
- 12.
The logistics performance index is on a scale from 1 (lowest) to 5 (highest). See https://lpi.worldbank.org/international/scorecard/radar/128/C/LAO/2016#chartarea.
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Vilavong, B. (2019). Laos in Need of Bolder Reforms for AEC Integration. In: Macdonald, R. (eds) Southeast Asia and the ASEAN Economic Community. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-19722-3_10
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