As is the case in many developing countries, the Lao People’s Democratic Republic (Laos), is adopting a policy of trade liberalization in an attempt to grow its economy. However, the impact of this approach is not clear, as there have been few studies on trade liberalization in countries such as Laos, which have a predominantly poor, rural population. To give policy makers the information they need, this study has looked at the impact of Laos’ trade liberalization policies on its economy, the livelihood of its people and its environment. The results show that trade liberalization in Laos will have a positive effect on growth, but that this effect will be relatively small. From an environmental point of view, it shows that trade liberalization will decrease CO2 emissions but will also increase the rate of resource depletion in some sectors. In terms of socio-economic impact, it shows that households in Vientiane, the capital of Lao PDR, and non-poor households in other urban areas will benefit from trade liberalization, but that many poor and rural households will suffer a drop in income. In light of this findings, the study recommends that the Laos government should find a way to protect those who will lose out. It also suggests that the government should strengthen rules and regulations to protect the environment.

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Is Trade Liberalization Good For Developing Countries? – A Case Study From Laos