Wiemann, Jürgen Ashoff, Verena Grad, Melanie Meyer, Anna Katharina Ruff, Stefanie Staiger, Thomas
Year of Publication:
Studies No. 51
Accession to the WTO will make Laos more attractive for foreign investors and business partners overseas. Yet market reforms and trade liberalisation are necessary but not sufficient for successful integration into the regional and the global economy. Governments of the more advanced countries in the region have played a strategic role in the catching-up process by supporting and guiding the development of new exports. Advocating an active role for governments does not imply, however, that the Government of the Lao PDR should simply copy its neighbours’ industrialisation processes. A strategy of complementary specialization may be more promising for a late-coming country with untapped agricultural potential. Global competition between old industrialised and newly industrialising countries tends to squeeze the prices of manufactured goods, whereas food prices are bound to rise in the long run, with a world population that is growing and showing an increasing appetite for better food. In this global environment of increasing scarcities, the Lao government, and donors, may be well advised to promote export diversification within agriculture before venturing into manufactured exports.