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Impacts of trade liberalization in the least developed countries: evidence from Lao PDR

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  • Kyophilavong,Phouphet
  • Hayakawa,Kazunobu

Abstract

This study empirically investigates the effects of tariff reductions in a least developed country on its economy. Specifically, we focus on tariff reductions based on the ASEAN Free Trade Area (AFTA) in Laos. F irst, we analyze how the reduction of AFTA tariff rates in Laos affects Lao imports from AFTA membe r countries. Our main finding is that the reduction of AFTA tariffs in Laos does not significantly chang e Laos’ imports. Second, we investigate their effects on plant-level employment. Consistent with the observa tion of a negligible change in Laos’ imports, we find no significant changes in plant-level employ ment. In short, although Laos decreased its tariff rates against other AFTA members, imports from them d id not significantly increase, and no significant changes occurred in employment. We discuss several possible reasons for these insignificant effects.

Suggested Citation

  • Kyophilavong,Phouphet & Hayakawa,Kazunobu, 2022. "Impacts of trade liberalization in the least developed countries: evidence from Lao PDR," IDE Discussion Papers 863, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    • Handle: RePEc:jet:dpaper:dpaper863
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    More about this item

    Keywords

    LDC|Lao PDR|Tariffs;

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations

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