Impacts of the Special Economic Zones of Lao PDR


This is a paper that I am going to present at the 5th Lao Studies Conference to be held in July this year.


One of the principal policies for rapid economic development in Lao PDR is the creation of special economic zones (SEZs). These areas aim to encourage inward investment by providing stable infrastructure and tax breaks in various categories to potential domestic and international investors. Hosting factories on this basis enables the country to pursue its trajectory along the Factory Asia paradigm (low labour cost competitiveness in export-oriented, import-substituting manufacturing). In addition to direct effects of increased employment, this also offers possible spillover effects in the form of industrial deepening and technology transfer. SEZs are generally located near to large markets or population bases or the intersections of transportation routes. If successfully managed, SEZs act as magnets for new forms of development and provides demand for social and public services. Social relations are also affected because many of the people drawn from the agricultural into the industrial sector will be women. The Lao government is planning to build an additional 41 SEZs and specific economic zones with the view of creating another 50,000 jobs and adding US$2,400 to local per capita incomes. International investors in both private and public sectors will be invited to contribute to these projects. This paper explores the existing use of SEZs in the country and their impact on local conditions from various perspectives (e.g. social, environmental, legal and geographic) and then attempts to predict likely impacts to be caused by the future constructions. Policy recommendations are derived from this analysis.

Keywords: Factory Asia paradigm, infrastructure, Lao PDR, social relations, special economic zones

The prgoramme for the conference is now online at:



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