The Economy

In almost every respect Laos is economically one of the least developed nations in southeast Asia. Most of the people are farmers who grow crops for their own needs only. There is little manufacturing, so almost all finished goods and some foods must be imported. The Communist government took over in 1975, and controlled the economy till about the late 20th century, when they relinquished their hold and began to encourage private ownership and foreign investment. Because exports are small in contrast with imports, there exists a serious economic imbalance, which is partly offset by large amounts of foreign aid.

Although farming is the principal livelihood, less than 10 per cent of the land is agricultural. The average family farm is about five acres (2 hectares) in size and produces mainly rice along with a few vegetables, which together make up much of the diet. In the northern highlands, where rice is less easily grown, corn is an important crop. Most farm families keep some livestock, usually water buffalo or cattle, for use mainly as draft animals. Tobacco, sugar, and peanuts are grown as cash crops for local markets. Coffee beans are grown for export. Fish is a dietary staple.

Mineral resources in Laos have not been fully surveyed, but there are large known reserves of iron ore, coal, and potash. Tin, mined near Muang Khammouan, and gypsum, mined near Savannakhét, are the only minerals produced in significant amounts; both are major exports. A few other minerals are produced on a small scale, including salt, limestone, and gold.

The country's forests are being depleted rapidly. Commercial logging was suspended in the early 1990's but much illegal logging takes place. Wood is used for building materials, for fuel, and for the making of tools and farm implements.

Except for a number of sawmills, manufacturing is largely limited to a few small plants that turn out items for local use, such as food, cigarettes, beverages, bricks, and cement. The handicraft industry is widespread and provides household goods and fine gold and silver work.

The Mekong and its tributaries have long been the country's chief transportation routes. Laos produces hydroelectric power, some of which it sells to Thailand. There are no railways and few paved roads. Air transport is fairly well developed, and there are regular flights to the larger towns in the interior as well as international service, chiefly from Vientiane.