Laos Economy

Laos State Overview


In the 8th century, the migrations of the Lao people began from southern China, displacing the hill tribes. In 1353, the kingdom of Lan Xang was established by Fa Ngum. During the 18th century it was divided into three kingdoms: Luang Prabang, Vieng Chang, and Champassak. Burmese, Siamese, Vietnamese and Chinese invasions followed. In 1893, France established the protectorate over Vieng Chang, and then over the other two kingdoms. Laos proclaimed its independence in 1945, during the Japanese occupation. When Japan surrendered, the return to the French protectorate was announced by the King of Laos, Sisavang Vong. In 1953, Laos achieved its independence. Vientiane is the capital city of Laos according to itypemba.

Prince Souphanou Vong, with the help of the Viet Minh, declared war on the Luang Prabang regime and established the Pathet Lao government. A year later, in 1954, the Geneva Conference ratified the country’s independence, with the exception that the provinces of Phong Saly and Sam Neua belonged to the Pathet Lao with the express direction of the International Supervision Commission. Laos joined the UN in 1955. In 1957, both Laotian factions united under the name of the National Union, through the Vientiane Agreement. Shortly after, universal suffrage was established, with the participation of the female vote.

The military presence and US interference in Laos, as part of the aggression against Viet Nam was notorious during this period.

In 1958, the government of the National Union was overthrown and Phoui Sananikone assumed power, who again outlawed the Pathet Lao. King Sisavang Vong passed away in 1959. In 1960, by means of a coup, Kong Le took the capital and assumed the government, but was deposed by a counterattack, led by General Phoumi Nosavan. In 1961 there were two governments in Laos: in Vientiane, the monarchist of Prince Boun Oum, and in Jang Jay, of Souvanna Phouma. Shortly after, the country was unified through a coalition called the National Union.

The Phatet Lao resumed the fight. In 1975, after 20 years, the United States withdrew its troops from the country and the Lao People’s Democratic Republic was proclaimed. Laos signed that year a Treaty of Cooperation and Friendship with Vietnam. In 1979, during the Vietnamese military campaign in Cambodia, Laotian troops were sent as reinforcements. Prince Souphanou Vong, in 1986, retired from the civil service, citing health reasons. The General Secretary of the Party, Kaysone Phomvihane, was confirmed in his position in November of that same year.

In 1988, in the first Lao PDR elections, local councils were elected. In 1989 a new Supreme People’s Assembly was elected. In December of 1989 he was proclaimed in Laos the “Provisional Revolutionary Government” (right – wing group National Liberation Front Laos Kingdom, ULNLF), which announced the release of Laos, statement designed to attract popular support.

In November 1988 the withdrawal of Vietnamese troops stationed in Laos began (from 30,000 to 50,000 soldiers in 1987). The relationship with Thailand, difficult since 1975, caused resentments on both sides. Thailand kept its border closed, hurting Laotian trade. In 1984, the dispute over three small towns was the excuse for the outbreak of hostilities. Attempts to resolve the conflict failed, until there was a meeting of the Security Council of the UN in October of 1984. The tension increased in May 1987, when another territorial dispute began, leading (in 1987 and 1988) to armed struggles and mutual accusations of invasion. There were hundreds of deaths. In february In 1988, however, peace negotiations began.

In 1985, Laos agreed to cooperate with the United States to find American soldiers “lost in action” in Laos during the Vietnam War. A delegation from the United States visited Laos in 1987 to affirm Laotian “humanitarian cooperation” and provide financial assistance. Some of



Laos is a mountainous country. Almost the entire territory is located more than 180 meters above sea level. Its geography can be divided into two regions. The first, which has less important heights, has as its epicenter the path of the Mekong River, whose hydrographic basin, of 524,412 km 2, is the axis of the nation’s economic life. In this area, the mountains are located on the eastern bank of the Mekong, accompanying its course.

In the south is the Bolovens Plateau, with a height of 1067 meters. West of the river are the most fertile rice fields in the country (the only lowlands in Laos). In the north are the highest and steepest mountains. From the northwest to the southeast, numerous deep and narrow river valleys develop. The highest peak in Laos is Phou Bia, at 3,084 meters.

The average height of the mountain ranges is 1524 meters. On the Xiangkhoang plateau (1098 meters), is the Jars plain, whose geographical location gives it great strategic and political relevance. The Anamitic chain, whose elevations vary from 1,524 meters to 2,438 meters, is an impressive natural barrier that separates it from Vietnam.


The climate is subequatorial and monsoon, with a dry season (November to April) and a rainy season (May to October). Temperatures exceed 32 ° C in March and April. During the winter months from December to February there are temperatures that vary between 16 and 21 ° C. Annual rainfall is around 3000 mm in the mountainous area and between 1500 and 1700 mm in the less elevated region.


Approximately two thirds of the territory of Laos is covered by tropical forests. The northern region has a perennial vegetation where oak, pine, magnolia and laurel predominate. The area of the lowlands of southern monsoon has deciduous forests, with exponents such as teak, stick rose, the ebony, the sandalwood and bamboo.


Animal life is represented by tigers, elephants, and leopards, among others.


There are four major ethnic groups, each with its own language. Lao-tai can be found throughout the Laotian territory, especially in the highlands, which is divided into black tai and red tai (predominant colors in women’s clothing). The Lao-theng tribe, who are supposed to be descendants of the primitive residents of the region, are also spread throughout the country and in neighboring countries. In contrast, in the lowlands, cities and near the Mekong River, live the Lao-Lu, who speak Laotian Tai. Lastly, the lao-soung group.

In religious matters, there are 57.8% Buddhists, 33.6% animists (especially from the lao-theng group), 3.8% non-religious, 1.5% Christians and 1% Muslims. The vast majority of the population practice Theravada Buddhism. The Chinese and Vietnamese minorities especially practice Mahayana Buddhism and Confucianism.

The official language is Laotian, although the privileged minorities in the cities also speak English, French and Vietnamese. Almost all Laotian cities are in the Mekong River Valley, except Luang Prabang. In 1978, the capital, Vientiane, had 200,000 residents. Laos urban areas are home to only a small percentage (less than 15%) of the residents.

Political strife has affected Laos’ population rate, which decreased from 2.2% a year from 1970 to 1975 to 1% in the late 1970s. The migratory movement of the population to China, Vietnam and Thailand has also contributed to this phenomenon. One of the main concerns of the government that took power in 1975 was to repopulate the country; thus, in 1976, birth control methods were banned.

Thousands of Laotians fled civil war and famine during the 1970s and 1980s, taking refuge in Thailand. More than 90,000 Laotian refugees remained in January of 1989 in the border camps in Thailand. In 1980, the United Nations High Commissioner for Refugees (UNHCR) launched a voluntary repatriation program, which nine years later had re-entered the country to 5,357 people, adding to this figure another 15,000 who returned independently.

Economic development

Agriculture contributed 26% to Gross Domestic Product (GDP) in 2012 and employed 72.4% of workers in 1988. The main crops are rice (which occupies 78% of the arable land), corn, cassava, potatoes, sweet potatoes and coffee for export. Pigs, poultry, cattle and fish are raised. In 1987, revenue from timber exports quadrupled (to $ 32.8 million). In 1989 However, deforestation led to a ban on the export of uncontrolled wood.

Industry (7% of labor capacity in 1980) and manufacturing (less than 1%) were underdeveloped. There are considerable mineral resources, mainly tin and gypsum. To a lesser extent, lead, zinc, coal, potassium, iron ore and small deposits of gold, silver and precious stones are mined.

The abundant hydroelectric power, which is exported to Thailand, is one of the main sources of foreign exchange (21.3% of total export income in 1987). Laos imports all the mineral fuels it consumes. Its main trading partners were the USSR, Thailand and Japan. The largest exports in 1987 were logs and wood products (51.1% of the total), electricity, coffee, tin, and gypsum. Mainly food, mineral fuels, machinery and transportation equipment were imported.

The economy was affected by the changes in Eastern Europe, since its development depended heavily on aid from the USSR and Vietnam. In the late 1980s, the government was forced to change its planned economy to a market economy, allowed the establishment of small private companies and ended the state monopoly on banking. In 1988 foreign investment was encouraged, allowing companies with 100% foreign capital to settle in the country, and companies with mixed capital to be created.

This plan aimed to reduce the balance of payments deficit by improving infrastructure, promoting exports, and encouraging industries to substitute imports. The serious economic crisis suffered by the USSR drastically reduced financial aid to Laos, which tried to reduce its dependence on the member countries of the now-defunct CAME and Vietnam. Meanwhile, the Laotian government hoped to strengthen economic ties with neighboring Thailand, Japan and the countries of the European Community.

In Laos there were no railroads. The road network (the main means of transport, used by 90% of freight traffic and 85% of passenger traffic) totaled 12,983 km in 1985. The Mekong River (a considerable part of its western border) is the most important commercial artery. largest in the country. The main airport is Wattai, in Vientiane. In 1988 the entry of Western tourists was allowed for the first time.

Laos Economy