Laos has made strong economic progress since the introduction of market-based economic reforms in the 1980s. Standards of living have improved for many people but the country still faces significant development challenges. The benefits of economic growth have not been shared equally and some social development indicators remain very weak. Educational opportunities diverge significantly depending on geography, gender, and ethnicity.
—Aid Investment Plan, Laos, 2015–16 to 2019–20 (DFAT)
Laos, a one-party Communist state, is one of the world’s 13 fastest growing economies.
Laos has made good economic progress since the government introduced market-based economic reforms in the 1980s and began to encourage private enterprise. Living standards have improved for many people but the country still faces significant obstacles to development.
The benefits of economic growth have not been shared equally and some social development indicators remain weak.
Laos remains a poor, rural country which depends on agriculture and natural resources. 71% of the population work in agriculture growing rice, and most Lao farmers are small subsistence farmers. More than a third of the population live in poverty and nearly one-fifth below the poverty line. The rural poverty rate is almost three times the rate in urban areas. Agricultural households (and those headed by an unemployed person) have the highest poverty rates. They are also the most vulnerable to shocks from fluctuating farm produce prices, loss of land and bad weather.
Educational opportunities diverge significantly depending on geography, gender, and ethnicity. The resources sector, led by mining and hydropower, will remain an important engine of growth and trade. Laos intends to become the hydroelectric battery of south-east Asia and export hydropower to its neighbours. To share economic opportunities more broadly, Laos will need to widen its economic base and encourage investment in agriculture, small and medium enterprise development and tourism.
Laos’ National Socio Economic Development Plan (NSEDP) 2016–20 provides the country’s overarching policy for responding to Laos’ development challenges. It intends to graduate from least developed country status by 2020, by developing human resources, developing the economy, diversification and integration, and maintaining economic and fiscal stability.
Australia supports Laos’ continued development. In 2017, Australia and Laos commemorate 65 years of strong diplomatic relationship (from 1952). Australia has the longest unbroken diplomatic relationship with Laos, underpinned by deepening economic ties, community links and development co-operation. Its aid to Laos aims to build prosperity and reduce poverty while helping Laos to economically integrate with the region.
Under the new Aid Investment Plan (2015/16–2019/20), the bilateral aid program will focus on basic education, human resource development, and a stronger trade regime and more competitive private sector growth. Australia’s support through ACIAR on agricultural research is increasingly important as Laos works to develop agriculture, reduce poverty and grow an inclusive economy.
In 2016, the Country Partnership Dialogue between ACIAR and the Lao Government reaffirmed the existing strategic priorities as on-going concerns. The government asked ACIAR to continue supporting:
- efficient and sustainable forestry industries, including non-timber products, with suitable climate change resilience
- innovative livestock systems that allow for intensification and land-use requirements while raising animal health and biosecurity levels
- fisheries programs that focus on habitat and fish-passage protection, and improved returns on indigenous aquaculture in reservoirs and lakes
- improved institutional, training and communication frameworks that enable smallholders to adopt and adapt new technologies, and develop the capacity of researchers and educators
- more cost-effective and sustainable production systems through mechanisation, diversification and intensification in rice-based farming systems, together with enhanced crop quality, quarantine standards and value-adding for domestic and export markets
- improved natural resource management that benefits livelihoods and food security, through delivering land-use options to smallholders, with attention to both water and nutrient management within climate change adaptation.