English
Economic Diversification, Structural Reforms Needed For Achieving Inclusive Growth in Laos
The Lao PDR must look for new drivers of growth by diversifying exports, maintaining macroeconomic stability, and providing good nonagricultural jobs to achieve sustained and inclusive growth, suggests a new study by the Asian Development Bank (ADB).
The study was released at the executive macroeconomic working group meeting between the government and development partners in Vientiane Capital on Nov 9, 2017.
Present at the workshop were Vice Minister of Planning and Investment Kikeo Chanthabounry, World Bank Country Manager for Lao PDR Jean-Christophe Carret, ADB Country Director Yasushi Negishi, and relevant officials of both sides.
The country diagnostic study, the Lao PDR: Accelerating Structural Transformation for Inclusive Growth takes an in-depth look at the challenges and opportunities policymakers face in strengthening and broadening the country’s economic base.
The study helps to identify constraints to sustainable and inclusive growth and offers concrete recommendations for policy makers. Hence, the study aims to provide policy support to the government in its effort to meet the target of the Lao PDR graduating from the roster of least developed countries by 2020.
The study complements ADB’s recently approved Country Partnership Strategy 2017-2020, and will serve as the basis for policy dialogue with wider development stakeholders on the challenges facing the country.
The policy recommendations are in line with the government’s National Socio-Economic Development Plan 2016-2020.
The study highlights that while the Lao PDR has been successful in sustaining high economic growth during 1986-2016, this has not yet translated into high private investment and employment opportunities in the modern nonfarm sectors of the economy.
Natural resource-intensive sectors have driven most economic growth, generating inadequate productive employment opportunities in the domestic labour market.
To achieve inclusive growth, the ADB study highlights the need for more job opportunities in nonfarm sectors even though the agriculture sector will remain as the main job provider.
The study also underscores the importance of focusing on high value-added products to achieve more inclusive growth. The Lao PDR should consider redeploying human resources through education and skills upgrading and expanding meaningful dialogue between the public and private sectors to help identify opportunities and constraints in developing new products.
By addressing these constraints, the government can encourage the private sector to invest in nontraditional products and thus accelerate the speed of structural transformation.