‘Greening’ growth the best way for Laos to prosper
My recent visit to Laos has convinced me that this nation is moving toward the right path to sustained economic growth, which could lead to less poverty and better lives for all of its people.
Over the past two decades, Laos has made significant development progress. It is one of the fastest-growing economies in East Asia, with GDP growth averaging 8% a year since 2000. Laos also successfully met the UN Millennium Development Goal of reducing extreme poverty, based on its national poverty line, to below 24% by 2015 from 33.5% in 2002.
As I have witnessed during my trip, people are enjoying better living conditions, with improved access to water supply, sanitation, roads and power. Indeed, the country’s electrification programme is one of the most successful in the world, and more than 90% of households now have access to electricity. Laos also has built 50% more road surfaces in the last decade, and two-thirds of all Lao villages are now connected by all-season roads.
But past economic growth has been largely fuelled by the capital-intensive natural resources sector, which has brought environmental degradation and few good jobs. At the same time, growth in manufacturing and agriculture has been stagnant in the past decade.
Many workers lack literacy and other basic job skills, and the environment for doing business remains restrictive and difficult. The current growth pattern of heavy reliance on natural resources has not led to a reduction in poverty commensurate with strong growth, and is not environmentally sustainable.
The good news is that Laos has the potential for robust economic growth with benefits for all Lao people, and with less damage to the environment.
We warmly welcome the landmark changes that the government initiated in 2015-16 to steer its development programme and medium-term strategy toward greater sustainability and green growth. Laos is one of six countries that have rolled out programmes to customise the Sustainable Development Goals, paying greater attention to environmental sustainability. It also has announced ambitious plans to lower its greenhouse gas emissions, while increasing resilience to climate change.
In its eighth National Socio-Economic Development Plan (NESDP) for 2016-20, Laos has set out a strategy for clean and green growth, and for accelerating the pace of poverty reduction and addressing rising inequality by improving service delivery and building a safety net, especially for the bottom 40% of the population.
Through our Country Partnership Framework, the World Bank supports efforts by Laos to implement the NESDP and realise its development goals, so more people can benefit from lasting and inclusive economic growth and development.
We strongly support the government’s effort to strengthen education and health and expand private investment. Better skills, education, health and training will make the biggest difference to the ability of Laos to grow and compete.
Working with development partners, we are pleased to support the government’s National Nutrition Strategy to reduce malnutrition and stunting in children through the Health Governance and Nutrition Development Programme. This programme includes a behaviour change campaign to help improve child nutrition by focusing on infant and child feeding practices.
The World Bank Group also supports the government’s strategy to diversify and move toward green economic growth, which will contribute to global efforts to combat climate change. For example, Laos can develop and promote high-value agricultural production and exports, such as organics, which can create jobs on and off the farm.
The government’s plan to develop environment-friendly, nature-based tourism can be a win-win: it provides an exciting opportunity to create jobs and fiscal revenues, while preserving natural resources, especially in rural areas. It would also be welcome news for the growing number of leisure travellers and environmentally conscious consumers in the region. The number of visitors to Laos grew by 19% per year in the last 10 years, reaching 4.1 million tourists in 2014 and generating US$641 million in revenue.
By “greening” economic growth, promoting private investment throughout the economy, and creating more opportunities for all people through investments in health and education, Laos has a sustainable path to ending extreme poverty and increasing shared prosperity for all.