The Impact of Road on Poverty Reduction in Lao PDR

Road access is important for connecting rural production to urban markets to ensure income generation, to help improve living standards and reduce poverty. Laos is a land-locked country with poor road networks. The OLS method is applied. In addition, about thirty percent of the population is under the poverty line. Research findings indicate road access during all seasons has a positive significant impact on poverty reduction, by increasing the real expenditure per capita level. We found that road access in all seasons allow farmers year-round access to the urban market, to expand agricultural production to improve productivity and finally to help reduce poverty, especially in rural areas of Lao PDR. Our study also supports previous studies and the Lao government’s policies in its Seventh Five-Year Socio-Economic Development Plan for increasing investment in infrastructure. The construction sector accounts for 35% of total investments, or USD $5,240 million to link rural and urban markets for expanding agricultural production; an MDG target for 2015.