According to cheeroutdoor, the state socio-economic policy of the Lao PDR is aimed at modernizing the technically backward national economy, improving the lives of all ethnic groups in the country, reducing the level of poverty of the population, transforming small farms, and in the outlying areas – remaining enclaves of natural economy. In the first decades, the republic simultaneously solved two main tasks – eliminating the grave consequences of the colonial period, the 30-year war, recreating a unified Lao state and forming a new developed society within the framework of administrative-directive methods of building socialism: nationalization, mass forced collectivization of the countryside, accelerated industrialization, nationalization all economic activity and a ban on private enterprise. This strategy, which proved to be ineffective,
Started at the turn of the 1970s – 80s. reassessment of the ongoing party-state socio-economic policy ended with the development and implementation in the middle. 1980s a new economic mechanism for managing the economy using the regulatory levers of the market. Over the following years, a liberal legislative framework was created and put into effect in the field of social, labor and land relations, economic activity, economic crimes, civil law, conditions for foreign investment, external borrowing, individual entrepreneurship; the banking and tax systems, the sphere of accounting and planning have been reformed.
Gradually, with the help of market methods of management, already to the end. 1980s the macroeconomic situation in Laos has stabilized. The sphere of material production has improved due to new and existing sectors of the economy and an increase in their productivity, the private sector has strengthened, the share of industry in the creation of GDP has almost doubled, while the share of agriculture has decreased, and the figures of GDP itself have increased. The overall economic growth reached 7-8%, inflation decreased fivefold, the revenue part of the state budget, formed from domestic sources, increased several times, the volume of foreign industrial investments in the real economy in the form of direct investments, loans and donor funds. Thus, the main causes of socio-economic tension that existed in the pre-reform period were eliminated. Thanks to the introduction of the innovation policy, the economy of the Lao PDR acquired a number of purely market characteristics: the role of private capital in industry, agriculture, trade, transport and other services and its component in the cost structure of the national product increased; competitive relations in the field of exchange, credit, business partnerships, and hiring of labor have been developed; the pricing system has been modernized, the forms and scope of state intervention in the economic activities of enterprises and individuals have changed in the direction of strengthening the strategic regulator behind it and the guarantor of providing conditions for achieving a developed society.
The monetary policy of the state and the central bank is focused on achieving sustainable growth rates, strengthening the kip, curbing inflation, ensuring minimum reserve requirements, leveling the country’s balance of payments, and revitalizing its domestic and foreign trade. To this end, through fiscal and disciplinary measures, the monetary system was reformed, the multiple exchange rate of the kip against the US dollar was abolished, the free circulation of hard world currencies and the Thai baht was allowed; interest rates on bank loans are being regulated, export-import transactions are being adjusted, favorable conditions are being created for the sale and purchase of shares, and the practice of banking operations on the open market has been established.
In the foreign economic sphere, the government adheres to the openness of the Lao market in the field of trade, investment and other financial and economic relations. At the same time, the state, although it has abandoned its monopoly on foreign trade, regulates this activity by setting quotas and tariffing for export-import goods, as well as improving the foreign exchange regime.
To con. 20th century Laos has emerged from a state of isolation from the rest of the world; the country’s transition to a free market was almost painless, without violating its overall socio-political stability. The Asian financial crisis of the 1990s had a depressing effect on the economic situation, slowing down the progress of reforms and exacerbating many unresolved problems. The foreign trade situation worsened, industrial and agricultural production decreased, the state-budgetary sphere suffered from a decrease in tax and export revenues, the Lao national currency depreciated several times, the activities of banks were disrupted, and the volume of foreign investment decreased. To the greatest extent, the negative social consequences of the crisis affected the life of the urban employed population due to the increase in the consumer price index, rising inflation,
To the beginning 21st century the crisis was generally overcome thanks to the competent social and economic policy of the leadership of Laos, aimed at restoring pre-crisis macroeconomic indicators by attracting foreign direct investment, new loans, credits and grants, limiting the purchase of a number of foreign goods and reducing the salaries of officials; Inflation was reduced, the exchange rate of the national currency and average annual economic growth rates were stabilized. But major macroeconomic problems remained: the limited range of domestic sources of accumulation and extreme dependence on foreign aid, the weakness of local capital, the tax base, the solvency of the state and the population, the competitive environment, the labor market, and the imbalance of the state budget and foreign trade.
2001 – the beginning of the next stage of reforms in financial and banking activities, the public sector, budget expenditure management, clarifying the role of the state and private and public property. The main task of our time is the implementation of a program to combat poverty and withdraw Laos from among the least developed countries in the world. In 2000–2002, foreign direct investment exceeded $25 million (89% of the total investment in the economy), real GDP reached $1.7–1.8 billion, the average annual GDP growth rate was maintained at 5.8%, GNP per capita – 310-320 dollars, the average annual inflation remained below 11%. The external debt of the Lao PDR in 2001 amounted to 2.4 billion US dollars, debt service payments – 41 million (in 2002 – 44 million), their share in GDP – 7.7 and 7.9%, respectively.
During the years of reforms, the situation in the financial sector improved due to the growth of state revenues from exports, a slight decrease in the cost of importing luxury goods, the maintenance of the bureaucracy, as well as expanding the range of internal sources of filling the budget due to the growth of tax and customs fees, rental payments to the state for the use of real estate, strengthening the control of the authorities over the observance of tax discipline by legal entities and individuals, reducing subsidies to state-owned enterprises. But the instability of the kip and inflation during the crisis disorganized the cost structure of the state budget, in 2001 the deficit exceeded 1.3 billion kip; there was an insufficient inflow of funds to the revenue side of the budget due to excessive state funding of national banks and its ineffective control over expenditures in peripheral administrative structures. These factors were taken into account, and in 2002, in the expenditure side of the new budget, the main amounts were allocated for the development of transport and other communications (22.8%, or 5% of GDP), followed by the item “current expenditures” – 16.9%, or 3, 8%, agriculture – 16.6%, or 3.7%, the other largest items are defense, education, health care, wages and social security.
The banking network does not cover the entire country, but only its administrative centers; savings banks appeared in many provinces. The two-tier system of banks (there were 15 in 1999) arose during the years of reforms and includes the Central Bank of Latvia (CBL, state property) and its branches in the provinces, banks of foreign and mixed capital, as well as more than 30 private (local business) non-bank exchange bureaus foreign currency. The policy of the CBL is monetarist in nature, changing interest rates and the use of massive withdrawals of foreign currency holdings is practiced in extreme cases, for example, during crises, and the latter are reimbursed by cash from the sale of Treasury bills or the CBL itself.
Foreign trade has not lost its agricultural orientation, but the process of diversifying its structure has accelerated, industrial and handicraft consumer goods, mineral products, and tourism have begun to play a greater role than before the reforms. The value of imports and exports is 50% and 60% of GDP, respectively; chronic foreign trade imbalance remains at the level of 6% of GDP (before the crisis – 16-17%). According to estimates, the foreign trade deficit in 2002 was close to 250 million US dollars, which is covered, as a rule, by foreign aid. There is also illegal trade with border countries that is not recorded by official statistics. The country is experiencing a large shortage of foreign currency due to the instability of the international market. The specific structure of exports is electricity, agricultural and forest products, clothing, tin, gypsum, goods, made from foreign components. The re-export of cars, motorcycles, and some timber has been arranged. Imported items are petroleum products, mineral oils, energy, construction and other industrial equipment and spare parts for it, agricultural and office equipment, vehicles, coal, mineral raw materials, fertilizers, building materials, chemicals, food, medicines.
The economy of Laos is dominated by the agricultural sector, in which 85% of the rural population and all employed people live and work. Its basis is plant growing based on rice growing; sugarcane, tobacco, coffee, cotton, peanuts, fruits, vegetables and legumes are grown. Agriculture provides 27-29% of GDP, is being modernized faster than other branches of agriculture due to material and technical re-equipment and the activation of the market factor of development. Harvests of many leading commodity peasant crops to the beginning. 21st century increased by 20%, the self-sufficiency of the Lao PDR in food was achieved and private export of it to neighboring Thailand was established. Animal husbandry, an auxiliary branch of almost every household, has a non-dairy direction; buffaloes, bulls, horses, pigs, small cattle, and poultry are bred. The agricultural activities of the population include forestry, providing wood, resins, oils, medicinal and aromatic herbs. Coffee, cardamom, benzoin are exported abroad. Domestic river fishing is developed; There are several fish breeding stations.
Industry is represented by enterprises of the factory type (with handicraft workshops, their number exceeds 15,000). Small-scale (96%) and medium-sized (3%) units prevail, which are rather poorly technically equipped; modern enterprises – several hydroelectric power stations, including the largest hydroelectric power station in Indochina – Ngym, near Vientiane. The highest rates are developed by hydropower (state property), mining, construction, processing of agricultural raw materials; food products and drinks, means of intensifying rural work, building materials, leather, ceramic, tobacco products, perfumes, pharmaceutical products, electric poles and electric wires, as well as the assembly of electronic equipment, cars and other technical means from imported components are produced; tin, gypsum, lignite, rock salt, silver, and gold are mined.
Transport is one of the most problematic sectors of the economy: there is no railway and a unified nationwide network of land routes. In terms of the average density of the roadway per unit area, Laos is one of the last places in the world. The main water artery is the Mekong, the right bank of which connects Lao PDR with Thailand. The specific structure is locally produced vehicles (boats, carts) and imported ones (cars, motorcycles, buses, airplanes, helicopters, small river boats). The total length of tar, gravel and dirt roads St. 32 thousand km. Tonnage of transported goods in 2002: 1946 thousand tons by road; river 770; air 1.9; passenger transportation – by road transport 23.2 thousand people, river transport 2.0 thousand; air 467.2 thousand. There is St. 20 airfields (international, operating year-round and receiving modern airliners in Vientiane, Luang Prabang, Pakse, Seno), several runways. Other communication lines include radio, telephone, telegraph, postal, telex, computer communications with access to international channels. Intersputnik was put into operation, since 1996 there is access to the Internet, which serves more than 6 thousand users. In 2002, there were almost 40 telephone exchanges, mainly in cities (automatic, magnetic and two mobile), the number of telephone numbers of St. 211 thousand which serves more than 6 thousand users. In 2002, there were almost 40 telephone exchanges, mainly in cities (automatic, magnetic and two mobile), the number of telephone numbers of St. 211 thousand which serves more than 6 thousand users. In 2002, there were almost 40 telephone exchanges, mainly in cities (automatic, magnetic and two mobile), the number of telephone numbers of St. 211 thousand
The service sector is the most dynamically developing sector of the economy, providing more than 1/4 of GDP; the industry’s average annual growth increased 1.7 times in 2000-02.
Tourism since the 1990s – a growing item of state revenues (in 2001 – 9.7% of GDP), youth and ecological tourism is developing. More than 8% of the total number of employees work in the industry. Crisis and several terrorist attacks in con. 1990s disorganized the industry. In the beginning. 21st century tourism activity has intensified. During 1991-2000 the number of tourists increased from 20 to 724 thousand people.