Economic Growth and Trade

Having experienced strong economic growth over the past two decades, with high annual average GDP growth rates, the Lao People’s Democratic Republic (PDR) remains among the least developed countries in South East Asia. Past economic growth has been driven primarily by natural resources, particularly mining, hydropower, and forestry, which did not generate as many jobs as anticipated. The recent COVID 19 pandemic also severely impacted micro, small and medium enterprises, which make up the vast majority of firms, and businesses owned by women. The tourism and handicrafts sectors were among the worst affected.  

Under its 9th National Socio-Economic Development Plan, the Lao government seeks “Sustained, Inclusive Economic Growth with Reduced Economic Vulnerability” and graduation from Least Developed Country Status. The Plan emphasizes a diversified, green growth economy that creates jobs with an emphasis on private sector development. Private sector-led growth and increased Lao competitiveness will require continued economic reforms that improve the business environment, advance integration with the region, and raise the competitiveness of local firms. 

USAID supports the Government of Laos to achieve these objectives through its Laos Business Environment (LBE) and  Lao Microenterprise (LME) projects, as well as through contributions to the World Bank’s Lao Competitiveness and Trade Project. These investments are helping Laos to recover from the economic impact of COVID-19, improve its business enabling environment, enhance the competitiveness of small and medium-sized enterprises, and further integrate into the regional economy. 

PROJECTS

Laos Microenterprise: Strengthens the competitiveness of agricultural microenterprises including farmers in Laos, by improving their capacity to respond to market needs, increasing their access to finance and facilities, and better linking them with markets.

Laos Business Environment: Supports the Government of Laos, businesses, and business associations to improve trade capacity and services to create a business environment that promotes trade and investment and increases private sector competitiveness.

Lao PDR Competitiveness and Trade Project: Facilitates trade, improves firm-level competitiveness, and simplifies business regulations in Laos. (Contribution to a multi-donor trust fund.)

Rural Employment Promotion (REP) Program in Laos - Phase I: Assists the Government of Lao PDR to implement its National Rural Employment Strategy on decent work and sustainable employment creation in rural areas, for increased income, improved livelihoods, reduced poverty, and to address rural to urban labor migration issues.