Poverty continues to decline in Lao PDR
- Poverty in Lao PDR declined from 33.5% to 23.2% in the last decade lifting half a million people out of poverty.
- The country has met the Millennium Development Goals (MDGs) target of halving extreme poverty.
- Improvements in citizens’ welfare are evident – the number of people with electricity has doubled and the proportion of those without a toilet halved.
- Improved skills and knowledge, increased access to land, coupled with non-farm job creation were major drivers of poverty reduction.
However, poverty could have declined further had a large number of vulnerable households not fallen back into poverty.
- Many people escaping poverty remain close or have slipped to the poverty line – about half of the poor in 2013 were not poor in 2008.
- About 80% of the population in 2013 live on less than $2.5 per day and face a 10% chance of falling back into poverty.
- Agriculture and health shocks are the main drivers of household vulnerability.
- Farming households are twice as likely to fall back into poverty compared to non-farming households.
Higher poverty reduction in Lao PDR can be achieved by creating better economic opportunities for the poor and non-poor.
- Creating jobs, increasing productivity, and improving the quality of jobs in the non-farm sector provides a pathway for reducing poverty.
- Improving the business environment will be necessary to attract investment to create non-farm jobs and raise wages without hurting competitiveness.
- Increasing investment in education is needed to provide people with the necessary skills to obtain good jobs outside agriculture and also improve the productivity of farmers.
- Strengthening the social protection system is important to ensure sustainable poverty reduction, especially putting in place social welfare programs that target the vulnerable and the chronically poor.