Last update: October 2014
Natural resource development in Lao PDR, also known as Laos, has helped the country achieve consistently high economic growth rates throughout the last decade. The reforms underway have reduced poverty and stimulated broad-based growth. However, recent expansionary macroeconomic policies put the country under increasing strains that need careful management. In the longer term, Laos’s key challenge is to ensure that natural resource wealth is transformed into investments in public infrastructure, services, and better health and educational outcomes for all, especially the poor.
Laos became a ‘lower-middle income economy’ in 2011 and, in 2013, Laos’ GNI per capita reached $1,460. If the country continues growing at this pace, and if human development outcomes improve as well, Laos will likely graduate from ‘Least Developed Country’ status by 2020.
Natural resources - forestry, agricultural land, hydropower, and minerals - comprise more than half of Laos’s total wealth. From 2005 to 2013, the hydropower and mining sectors combined generated about one third of the country’s economic growth. Developing these resource sectors to achieve long term development sustainability is one of the key focuses of the Government’s National Development Plan, to which the Country Partnership Strategy is aligned.
Laos, a member of the Association of Southeast Asian Nations (ASEAN) and the ASEAN Economic Community, is increasing its integration into the regional and global economy. On February 2, 2013, Laos officially became a member of the World Trade Organization, the culmination of a 15-year process of reforms and negotiations.
Laos made good progress on many of the Millennium Development Goals but is off track in some areas. 44% of under-five children are stunted (too short for their age) and 27% are severely underweight. In addition, Laos still has a high maternal mortality rate and limited skilled birth attendance. Laos could also do more to place gender equality at the center of its national development plans.
In the Seventh National Social and Economic Development Plan (NSEDP) for 2011-2015, the Government laid out its poverty reduction strategy to meet the MDGs by 2015, aiming to foster economic growth with equity, develop and modernize the country’s social and economic infrastructure and enhance human resource development.
The World Bank Group (WBG) continues to work with the Government as it lays the foundations to graduate from Least Developed Country status. The WBG’s operations in the country are guided by the Country Partnership Strategy (CPS) for 2012 to 2016, designed to support the Government’s Seventh NSEDP and build stronger institutions for sustainable and inclusive development.