The agriculture and fishery sectors dominate in Lao PDR, accounting for about 70 percent of employed persons in 2010. Lao PDR’s entry into the Asean Economic Community at the end of 2015 offers opportunities for sustainable industrialization. Estimates indicate an additional 130,000 jobs and an increase in industry and service sector jobs.
Agricultural productivity in Lao PDR today is still less than half of Thailand’s, although it has increased over the past few years to overtake productivity in Vietnam and Cambodia. In the rice sector, low farm productivity is due to factors such as inadequate access to high-quality seeds and other inputs, limited extension services, inefficient and inadequate irrigation and drainage infrastructure, and regional differences in social and climactic characteristics. Greater productivity would not only improve the livelihoods of the large proportion of farmers, but also free up labour to move into higher-productivity sectors.
The country’s economic growth is heavily reliant on natural resources. From 2005 to 2013, the hydropower and mining sectors combined generated about one third of the country’s economic growth. The natural resources sector has a high ratio of capital to labour, and was able to produce approximately 18 percent of Lao PDR’s gross domestic product (GDP) in 2013 with only 22,000 people. The economic growth was therefore, not able to generate a significant rise in shared growth and employment. Statistics on mineral rents as a percentage of GDP show a figure for the Lao PDR of 10.3 percent in 2013 (with an average of 10.5 percent since 2005), which is at the high end globally. Diversification of the economy will be necessary to achieve a more inclusive growth that generates decent work opportunities.
Lao PDR’s economy needs to become much more competitive and the overall business environment friendlier to the private sector. According to the World Bank’s Doing Business Report 2014, Lao PDR ranks 139 out of 190 countries for overall ease of doing business. Lao PDR ranks particularly low in terms of the time and cost of resolving insolvency (position 169), protecting minority investors (165), starting a business (160) and getting electricity (155). Structural reforms are needed for Lao entrepreneurs to conduct their business activities more efficiently and compete with other countries.
In the future, technological capabilities have to be upgraded by encouraging local innovations. In sectors and subsectors relevant to Lao PDR, applied research and innovation can shape the development of agro-industries and food industries, as well as boost rural productivity and resilience. The innovations and technologies will need to inform the development of agricultural extension packages and other forms of livelihood support.
Green Growth and Green Industry need further promotion. The Ministry of Industry and Commerce, in particular the Department of Industry and Handicraft, aims to promote participation by both public and private sectors in Green Growth and Green Industry. The “Greening” of industry will include policymaking, improved industrial production processes and resource-efficient productivity. The country’s Green Industry status is still at an early stage. Specific policies and instruments still need to be developed for Green Growth. Each Ministry has its own interpretation, and there is a need for a common strategy that could bring all the relevant Ministries together
Investment in infrastructure and innovation is one of 17 Global Goals that make up the 2030 Agenda for Sustainable Development. An integrated approach is crucial for progress across the multiple goals. Learn more about Goal 9 and its targets.