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Geography, agriculture and economy

Geography

The Lao People's Democratic Republic is a landlocked, mountainous country situated in Southeast Asia and bordering on Thailand to the south-west, Myanmar to the north-west, Viet Nam to the east, China to the north and Cambodia to the south. The country covers a total land area of 236,800 km2. The population of about 5.9 million (2005) is growing at a rate of 2.1 per cent per year.

The country's terrain is largely rugged and steep, with some plains and plateaux, and it is extensively covered by unspoiled tropical forest. The population is made up of 49 ethnic groups belonging to 4 ethno-linguistic families. The flat land bordering the Mekong River, which forms a large part of the western boundary with Thailand, is inhabited mainly by ethnic Lao people. Many of the country’s multi-ethnic groups live in the mountainous zones along the northern and eastern borders.

The Lao People's Democratic Republic is one of the world's few remaining communist states. In recent decades the government has begun to adapt to the changing political and economic environment, introducing reforms to encourage the transition to a market economy and to stimulate growth. It is one of Southeast Asia's poorest countries. Particularly in rural areas infrastructure is extremely rudimentary. Outside the capital many people live without electricity or access to basic facilities. The country has no railways and very limited road and telecommunications systems.

Over the last decades, there have been ongoing low-level rebellions against the Lao regime, notably around the capital, Vientiane, and among the ethnic Hmong groups.

Agriculture

Some 80 per cent of the country's terrain is mountainous, and 54 per cent is forested, leaving only 4 per cent of the land area suitable for cultivation. Agriculture is still the mainstay of the economy, employing about 80 per cent of the country's labour force. The sector accounted for 49 per cent of gross domestic product (GDP) in 2003, and was growing at an estimated annual rate of 3.8 per cent. Overall, agriculture's share of GDP is declining steadily as other sectors grow. This is offset to some extent by recent growth in agriculture, stimulated by the lifting of barriers to domestic and external trade and linkage to the markets of the country's most dynamic neighbours: Thailand, China and Viet Nam.

The main crop is rice, which is grown on the fertile floodplain of the Mekong River and elsewhere in the country by farming households for their own use. Other major crops are vegetables, fruit, spices and cotton. The government has been largely successful in eradicating the cultivation of opium poppies, which was concentrated mainly in upland areas. 

Farming is largely practised at subsistence level. The average landholding per household is 1.6 ha, and productivity is low. Shifting agricultural systems, in which areas of land are cleared and cultivated for a number of years, account for about one third of the total cultivated area. Only 18 per cent of farm households have access to irrigation.

During the last few years of the government’s land reform programme, more than 100,000 land titles were granted to local people in both urban and rural areas. T he government plans to grant land titles to about 400,000 families by 2010.

Economy

The Lao government began to make the transition from a centrally planned to a market-oriented economy in 1986, and has introduced a series of reforms designed to encourage foreign investment, an open trade regime and a return to private enterprise. As a result, the country's economy has been growing strongly for more than a decade, despite having registered a brief decline during the Asian financial crisis after 1997. Annual growth reached 6 per cent in 2004.

The Lao People's Democratic Republic has substantial natural resources, including forestry, minerals and hydroelectric power. At present the main exports are garments, electricity, wood and wood products, and coffee. The country's three neighbours, Thailand, Viet Nam and China, are all growing rapidly, and their proximity offers opportunities for trade and market linkages. China is becoming a potential export market, especially for timber and agricultural products. Exports of mining products to Australia are expected to grow rapidly in the near future.

 

Source: IFAD