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Economic Setting:
Laos
• The traditional Lao economy wasbased on agriculture, handicraftproduction, and trade. Indeed,for centuries before Europeansarrived, flourishing local andlong-distance trade networkshad linked Southeast Asia with
Economic Setting:
Laos
East and South Asia. It was theprospect of controlling thelucrative Asian trade in spicesand other luxury goods thatinitially lured the French andother Europeans to SoutheastAsia in the 17th and 18th
Economic Setting:
Laos
centuries. Later they also hopedto exploit the region’s naturalresources. However, Frenchefforts to develop Laoseconomically in the late 19thand early 20th centuries came tolittle, as they quickly concluded
Economic Setting:
Laos
that Laos’s terrain madecommercial agriculture andmining difficult. The civil warthat followed independence in1953 further impeded economicdevelopment. Even today, a largemajority of Lao still engage in
Economic Setting:
Laos
subsistence agriculture. Industryis limited to small-scalemanufacturing of consumerproducts, though clothing andtextile products have become asignificant export. Governmentrevenue is insufficient to cover
Economic Setting:
Laos
expenditure and investment ininfrastructure development,leaving the deficit to be met byforeign aid. The principal aiddonors are Japan, France,Sweden, and Australia. In thelate 1980s the government
Economic Setting:
Laos
opened the economy to foreigninvestment. As a result, theaverage growth rate betweenand was percent, and by 2006Laos’s gross domestic product(GDP) had climbed to $3.4billion. Average GDP per capita
Economic Setting:
Laos
rose to $596.80, compared to$725.30 in Vietnam and $511.30in Cambodia. Like the economiesof other countries in the region,the Lao economy suffered badlywhen the value of several Asiancurrencies fell sharply in the late1990s.
Economic Setting:
Laos
Laos has a total labor force of 2.4million, of whom 85 percent arein agriculture, 4 percent are inindustry, and 11 percent are inthe service sector. Ruralunderemployment and urbanunemployment remain high,
Economic Setting:
Laos
though statistics are notavailable. There is an officialFederation of Trade Unions, butindependent unions are banned.
Economic Setting:
Laos
Agriculture is the principaleconomic activity in Laos,contributing 42 percent of GDP.Only 4 percent of Laos’s totalland area is cultivated, but 80percent of the cultivated land isplanted in rice (both glutinous
Economic Setting:
Laos
and white). Other crops includecorn, coffee (the only substantialexport crop), soybeans,sugarcane, and sweet potatoes.Cotton, tobacco, and cardamomare also grown. The governmentencourages animal husbandry,
Economic Setting:
Laos
and livestock numbers havesteadily increased since the late1970s. Lao farmers raise waterbuffalo, cattle, pigs, horses,goats, and poultry.
Economic Setting:
Laos
Timber is a major export forLaos, with production estimatedat 6.1 million cu m (217 millioncu ft) in 2006. Some timber isprocessed as sawn boards andplywood, but most is exported inthe form of logs. Despite
Economic Setting:
Laos
government attempts toregulate and manage theindustry, illegal logging andsmuggling of timber remainwidespread. Fish is an importantitem in the Lao diet, but thecatch of 107,800 metric tons (in
Economic Setting:
Laos
Laos was virtually closed toforeign tourists from 1975 untilthe late 1980s, but then began toactively encourage tourism.Numbers of foreign visitorsincreased rapidly to more than100,000 by the late 1990s.
Economic Setting:
Laos
Favored destinations includeLouangphrabang, Vientiane, andthe southern part of the country.
Economic Setting:
Laos
The unit of currency in Laos isthe kip, which until the Asianfinancial crisis of 1997 wasvalued at 920 kip to U.S.$1. Laoshas a central bank, the Bank ofthe Lao People’s DemocraticRepublic, and six state-owned
Economic Setting:
Laos
commercial banks. Foreignbanks have been allowed tooperate in Laos since 1989. TheForeign Trade Bank handlesforeign exchange and trade. Laoexports in 2000 were valued at$315 million, while imports
Economic Setting:
Laos
stood at $521 million. Principalexports included timber,hydroelectricity, coffee, and tin;principal imports included food,petroleum products, vehicles,machinery, and steel. Laos’smost important trading partners
Economic Setting:
Laos
are Thailand, Japan, and China.In 1997 Laos joined theAssociation of Southeast AsianNations (ASEAN), which has acommitment to establish freetrade among member states by2008.
Economic Setting:
Laos
Source:
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