Resource Booms, Growth and Poverty in Laos: What Can We Learn from Other Countries and Policy Simulations?

PEP Working Paper serie No. 2013-05

29 Pages Posted: 18 May 2018

See all articles by Phouphet Kyophilavong

Phouphet Kyophilavong

National University of Laos

Chanthachone Senesouphap

National University of Laos - Faculty of Economics and Business Management

Somnack Yawdhacksa

National University of Laos - Faculty of Economics and Business Management

Date Written: July 1, 2013

Abstract

Laos is a small, open, least-developed country (LDC) in Southeast Asia. However, it is a resource-rich economy with over 570 identified mineral deposits. As a result, Laos has experienced massive inflows of foreign direct investment (FDI) in the mining and hydroelectricity sectors since 2003. Despite the likelihood that resource booms will carry both positive and negative impacts on the Lao economy, this issue has been under- researched in Laos. This study thus lays out a framework to quantify the impacts of resource booms on the macro economy and on poverty in Laos using a computable general equilibrium (CGE) model. We find that the higher capital stock and productivity led to increased value added, production, exports and investment in the mining sector, resulting in higher real GDP, exports and investment. Unfortunately, the associated Dutch disease effects (particularly real exchange rate appreciation) negatively impact real production and value added in agriculture, industry and government services.

Keywords: Resource boom, CGE model, Dutch disease, Laos

JEL Classification: D58; Q33

Suggested Citation

Kyophilavong, Phouphet and Senesouphap, Chanthachone and Yawdhacksa, Somnack, Resource Booms, Growth and Poverty in Laos: What Can We Learn from Other Countries and Policy Simulations? (July 1, 2013). PEP Working Paper serie No. 2013-05. Available at SSRN: https://ssrn.com/abstract=2366924 or http://dx.doi.org/10.2139/ssrn.2366924

Phouphet Kyophilavong (Contact Author)

National University of Laos ( email )

Lao-Thai Friendship Rd. Sokpaluang
Sisatanak District
Laos

Chanthachone Senesouphap

National University of Laos - Faculty of Economics and Business Management

Laos

Somnack Yawdhacksa

National University of Laos - Faculty of Economics and Business Management

Laos

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