Laos: Economy

Economy

Laos is one of Asia's poorest nations. Agriculture employs most of the Laotian workforce and accounts for about half of its gross domestic product. Rice is by far the chief crop; sweet potatoes, vegetables, corn, and peanuts are also grown. Commercial crops include coffee, sugarcane, tobacco, cotton, and tea. Illegal opium and cannabis were long produced in the northwest, part of the “Golden Triangle” (which also includes neighboring portions of Thailand and Myanmar), but production there was largely eradicated by 2005. Water buffalo, pigs, cattle, and poultry are raised, and fish from the rivers supplement the diet. Forests cover over half of the country; tropical hardwoods are cut and lac is extracted; much timber is exported illegally to Vietnam. Copper, gold, tin, and gypsum are mined; other mineral resources include gemstones. Manufacturing is limited; textiles and garments are the most important products. Tourism has become increasingly significant in the 21st cent, providing service jobs for Laotians.

Laos has significant hydroelectric potential and, with the increasing construction of dams in the 21st cent., electricity has become a prime export, mainly to Thailand and Vietnam. Dozens of dams have been built, are under construction, or are planned for tributaries of the Mekong, and a number of dams are also planned for the river itself. The first two Mekong dams, Xayaburi in N Laos and Don Sahong in S Laos, began producing power in 2019. The other principal exports are textiles and garments, timber and wood products, coffee, and tin. Since machinery and equipment, vehicles, fuel, and most consumer goods have to be imported, there is a continuing foreign trade deficit. Leading trade partners are Thailand, Vietnam, and China. In an attempt to expand the nation's economy, a foreign investment law was passed in 1989; the statute was further liberalized in 1994, and since the start of the 21st cent. the government has sought increasingly to develop the private sector.

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