Trade liberalization, economic reform and poverty reduction in Lao PDR

Since 1986 Lao PDR has greatly reduced the barriers to international trade and the government's direct controls over the economy. Aggregate growth during this reform period has been quite rapid. Although the benefits of growth have gone disproportionately to the non-poor and inequality has increased, poverty incidence is nevertheless estimated to have fallen from about 45% in 1992-93 to 30% in 2002-03. After surveying these developments, this paper discusses the policies that the government is currently proposing as ways to ensure that the benefits of further opening of the economy are more equally shared.