Development Strategies and Policies:
Economic and Political Impact of Foreign Aid in the Lao People’s Democratic
Republic
March 26, 2005
Waterfront Activity Center
University of Washington, Seattle, Washington
in the Lao PDR
By
Mana K. Southichack, PhD
Development and Agricultural Economist
Hawaii Department of Agriculture
and
Interim Executive Director
LaoEcon Organization
Abstract
are purely natural phenomena while others are manmade and event-driven. Lowering these barriers would
stimulate economic growth, but how broadly and far reaching these barriers could be lowered dictate growth
characteristic, whether growth will benefit a few elites or the mass. The efforts to reduce economic barriers
by both the Lao government and foreign aid community have focused on natural variables while evidences
indicate that manmade, institutional barriers are the main impediments to a broad-based economic growth.
Although the aid community has addressed the importance of the institutional barriers to the socioeconomic
progress, they are largely neglected. While gradual institutional reforms in some areas are taking place,
aided by foreign donors, they are far from being sufficient and insignificant for a broad-based and sustained
economic growth. The existing governance, which places an emphasis on societal control, does not only
restrain growth, it exacerbates income inequality at the expense of the poor and disadvantaged. As an
example, government suppression of the free flow of information and the private sector’s participation in the
publication and media businesses does not only depress employment in the industry, the development of
national intellectual capital stock and the market at large, it discriminates against the average and poor
population. The absence of fundamental reforms in governance has caused the fruit of foreign aid and
economic growth to be skewed towards the few urban elites at the expense of the poor. To move towards
sustainability and broad-based economic growth with social advancement necessary for poverty eradication
and beyond, broad-based fundamental changes are necessary.
All views and opinions expressed herein reflect those of the author alone and do not by any means
represent those of nor endorsed by the symposium's organizing committee and its sponsors.
