Lao PDR: Hastening Slowly?

Abstract

Notwithstanding, more than a decade of concerted efforts towards liberalizing the economy and attracting investment towards the productive sectors of the economy and resulting annual growth rate of over 5 per cent Lao PDR, even today, exhibits symptoms of an underdeveloped economy. Over 80 per cent of its population lives in rural areas depending on agriculture and allied activities. Yet, they contribute only about 50 per cent of the GDP pointing towards low levels of productivity in the primary sector. The industrial sector, which contributes about 23 per cent of the GDP, essentially, comprises primary processing and is characterized by high regional concentration. In 2001, Vientiane Municipality and Vientiane Province together accounted for 55 per cent of the large, 41 per cent of the medium and 19 per cent of the small industrial units¹ and over 41 per cent of the industrial employment in the country. The service sector, which contributed almost a quarter of the GDP in 2001, was found dominated by wholesale and retail trade. This however, does not imply that there has not been any structural change in the economy. The observed change during the last decade mainly was in terms of a decline in the share of agriculture from about 61 per cent in 1990,² the initial year for which data is available, to a little over 51 per cent in 2002. Correspondingly.