MPIA-12028 Resource Boom, Growth and Poverty in Laos

Abstract

Theoretically, abundant natural resources could promote growth through more investment in infrastructure, health care and human capital development. However, various empirical studies have illustrated that resource-rich countries fail in accelerating growth compared with resource-poor countries. There are various factors for low growth in resource-rich countries, but one of the most important factors is the so-called “Dutch disease”. Laos is a small, open Least Developed Country (LDC) in Southeast Asia. Laos was ranked 130th out of 177 countries. 34 percent of the population lives below the poverty line. However, it is a resource-rich economy with over 570 mineral deposits identified. As a result, since 2003, Laos has experienced massive foreign capital inflows in terms of Foreign Direct Investment (FDI) in the mining and hydropower sectors. Resource sectors contributed about 2.5% of GDP during 2000-2007; resource sector revenues account for 18% of total tax revenue (2007). On the other hand, resource sectors also have a negative impact on economy through appreciation of the real exchange rate and declining non-resource sectors. Despite the significant potential for both positive and negative impacts from resource booms on the Lao economy, there is a gap in the research on this issue in Laos. Therefore, the main objective of this study is to quantify the possible impacts of resource booms on nation-wide economy and poverty using a Computable General Equilibrium (CGE) model. The simulations of macroeconomic adjustment policies will also be investigated in order to evaluate ways to escape Dutch disease.


Members

Project leader: Phouphet Kyophilavong

Project researchers: Chanthachonh Senesouphap | somnack yawdhacksa


Journal publication

No journal publications.


Working Papers

Title Modified Size Comments Recommendations
Resource Boom, Growth and Poverty in Laos; What Can We Learn From Other Countries and Policy Simulations? 2013-07-15 1348.02KB 0 0

Policy Briefs

Title Modified Size Comments Recommendations
Resource Boom, Growth and Poverty in Laos: what can we learn from other countries and policy simulations? 2012-11-27 1339.34KB 0 0

Final report

Title Modified Size Comments Recommendations
2012-08-13 225.26KB 0 0

Proposal

Title Modified Size Comments Recommendations
Resource Boom, Growth and Poverty in Laos 2010-09-24 120KB 0 0

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