Economic Integration and Industrial Location in Laos: How Has Border Mattered?

Abstract

After a nearly two centuries of struggle for independence and civil war, Laos¹ became a politically integrated and independent state once again in 1975.² However, Laos was and is still far from becoming a unified market. Major cities are separated not only by a mountainous landscape but also a poorly developed transportation infrastructure. A relatively small population living dispersedly over large areas and restriction of trade between provinces until the mid-1980s have made broadly defined transportation extremely high.³ Small urban areas could not sufficiently function as consumption centers even for agricultural products in nearby provinces. As a consequence, major cities bordering Thailand to the west, where the majority of Lao live, continue to depend more on agricultural products imported from more “industrialized Thailand” instead of subsistent agricultural neighborhoods.