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Resource booms, growth and poverty in Laos : What can we learn from other countries and policy simulations?

Author

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  • Phouphet Kyophilavong
  • Chanthachone Senesouphap
  • Somnack Yawdhacksa

Abstract

Laos is a small, open, least-developed country (LDC) in Southeast Asia. However, it is a resource-rich economy with over 570 identified mineral deposits. As a result, Laos has experienced massive inflows of foreign direct investment (FDI) in the mining and hydroelectricity sectors since 2003. Despite the likelihood that resource booms will carry both positive and negative impacts on the Lao economy, this issue has been underresearched in Laos. This study thus lays out a framework to quantify the impacts of resource booms on the macro economy and on poverty in Laos using a computable general equilibrium (CGE) model. We find that the higher capital stock and productivity led to increased value added, production, exports and investment in the mining sector, resulting in higher real GDP, exports and investment. Unfortunately, the associated Dutch disease effects (particularly real exchange rate appreciation) negatively impact real production and value added in agriculture, industry and government services.

Suggested Citation

  • Phouphet Kyophilavong & Chanthachone Senesouphap & Somnack Yawdhacksa, 2013. "Resource booms, growth and poverty in Laos : What can we learn from other countries and policy simulations?," Working Papers MPIA 2013-05, PEP-MPIA.
  • Handle: RePEc:lvl:mpiacr:2013-05
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    Cited by:

    1. Taguchi, Hiroyuki & Soukvisan, Khinsamone, 2017. "Analysis of the “Dutch Disease” effect: The case of resource-rich ASEAN economies," MPRA Paper 81010, University Library of Munich, Germany.
    2. repec:mth:jad888:v:3:y:2017:i:2:p:60-77 is not listed on IDEAS

    More about this item

    Keywords

    Resource boom; CGE model; Dutch disease; Laos;

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)

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