POLITICAL, SOCIAL AND ENVIRONMENTAL PERSPECTIVES
OF ECONOMIC DEVELOPMENT IN LAOS

By Sin Vilay, PhD in Economics

Excerpt from Dr. Sin's remarks before presenting his paper at the
Economic Symposium on Laos 2005:

"... we need to be professional, balanced, and objective in our
approach."

"While we need to avoid rhetoric that is driven by our individual or
group political inclination, we should not shy from cold hard
conclusions based on cold hard facts and analysis, regardless of the
political sensitivities.  It would be also useful if we could be clear-cut
in our views rather than hedging them."
Identifies Problems          Advances Knowledge            Develops Solutions
A catalyst for progressive changes
Press Control
and
Socioeconomic Development: What can Laos learn from the world?

By
Mana Southichack, PhD
October 24, 2005


Abstract
 

Statistical evidence strongly indicates that Press Control Index (PCI) and per capita Gross National
Income (GNI) are inversely related, with high-income countries having lower PCI and low-income
countries tending towards higher PCI. That is, countries in which governments exercise strong control
of the press tend to have lower per capita income than those with more moderate government
interference. High PCI reflects government’s desire to attain high level of control over its citizens by
controlling and restricting the press through economic, legal, and political means. Continued
government strict control of the MIA industries, which comprised of media industry, intellectual industry,
and art and entertainment industry, can hamper the economy directly by preventing or hindering private
investment in the industry, thereby retarding income and job growth. It also penalizes citizens with
special talents and abilities in art and intellect, costing society in the forms of lost talents and human
potentials. The indirect effects, which are more significant in strength and scope than the direct effects,
have various aspects, some are revealing and, others, hidden. Strong government control of the press
does not limit to the MIA industries, it depresses other industries through backward and forward linkage
effects, human capital effects, and cross-industry escalation effects. It also causes institutional rigidity,
which prolongs inefficiencies. Strong government control also exacerbates inequality in favor of the
better-off individuals at the expense of the poor and disadvantaged citizens.

Coffee is one of Laos’ top-five export earners and
agricultural largest export commodity. The Lao coffee farm
community is comprised of more than 20,000 smallholders
operating 1-3 hectares, a much smaller number of
plantations with 4-10 hectares and several emerging large,
domestic- and foreign-invested plantations cultivating more
than 100 hectares. The farm industry links extensively with
other related businesses and jobs throughout the coffee
industry supply chain, making it a vital part of the country’s
economy. Any major change that occurs in the Lao coffee
industry will affect many lives and the economy far beyond
the coffee farm community. Boosted by government
supports and inflows of resources from domestic and
foreign private investments, the Lao coffee industry is on a
path of growing farm output and Laos-grown brands, with
increasing share of the Arabica varieties. This growth trend
is driven by land expansion, growing yield, the need for
value creation, and demand from the specialty coffee
market. What are the development patterns of the Lao
coffee industry in the past several decades? How did the
global price crash in the early 2000s and entries of foreign-
invested firms affect the industry and lives of village
farmers and how have these changes shaped the future
growth path of the industry? What are the major problems,
challenges, and concerns that exist in the industry today?
As the industry continues to mature, will small farmers have
a fair share of the additional benefits to be created? Will
the drive to attain higher productivity be achieved at the
expense of the environment and the health and wellbeing
of farm workers? What can policy makers, development
agencies, and socially-and-environmentally responsible
private coffee business owners/executives do to lead the
development of the Lao coffee industry towards growth with
an economic-social-environmental balance? These
questions are addressed in this paper.

The Lao Coffee Economy:
A New Growth Path on the Horizon?
By Mana Southichack, Ph.D.
30 October 2009
(Full report revised 20 November 2009)

Boosted by government supports and inflows of resources from
domestic and foreign private investments, the Lao coffee industry is
on a path of growing farm output and Laos-grown brands, with
increasing share of the Arabica varieties. This growth trend is driven
by land expansion, growing yield, the need for value creation, and
demand from the specialty coffee market.
The Lao Coffee Economy:
A New Growth Path on the Horizon?

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