Laos: Hope for Faster Development
Being one the poorest countries in the world Laos, a South Asian country, is struggling to develop with the rest of the world. With a GDP per capita of only $1700, this country is not at the same level as other South Asian countries. The lack of strong economic growth can also be due not only their political and economic systems but also of the absence of a clear legal system, and culture differences from more developed countries. With certain changes in these areas there is hope that Laos can increase there economic growth.
Laos a country in South East Asia is one of the few purely communist countries in the world. As a result their economic system which is closely tied with their political affiliation is a command economy. In a command economy the government decides on what is best for the country as a whole. The government is in total control of the economy and individual rights are restricted. The legal system of Laos is based on traditional customs. There is a lack of copyright or patent laws as well. The dominant religion in Laos is Buddhism. This accounts for 60% if the population where the other 40% practice other religions including Christianity according to the CIA’s 2004 World Factbook. The literacy rate in Laos is defined as people who can read and write over the age of 15. Out of the total population of approximately 6 million, 66.4% is able to read a write. It seems that the male population is more literate than the female suggesting that more males have access to education.
Culture affects the incentive and the ability to innovate. In a command economy there is very little incentive to innovate because individual rights are not recognized. The government owns all of its resources and decides what is best for a country as a whole. Its legal system does not protect intellectual property and does not enforce contracts. With out this protection, such as patents or copyright laws, there is little incentive to innovate as well. The communist political system of Laos which focuses on the whole also contributes to a slower development to do the lack of incentive.
According to the text command economies are very poor. If people are not recognized for their ideas of protected they do not see a point in trying something different. Education is necessary in order to innovate and according to the CIA World Factbook. About 66% over the age of 15 can read and write and even so, they cannot do much with it. Culture wise, there is emphasis on the group as a whole which is true for most eastern cultures. Out of the richest 25 countries only 2 of them were eastern countries.
To increase economic development and raise GDP, Laos should first look at its political and economy system. If they were to perhaps switch to a market economy where private individuals own the businesses and make the decisions. Even so with this type of economy the government still has an important role to play. According to the text market economies had a bigger increase in GDP per capita between 1975 and 1995. Economic development from this chance of economic systems may actually lead to a more individualistic or democratic political system, increasing the incentive to innovate. In addition to changing the economic and political systems contracts should be enforced so that individuals are protected and that no regulations limit productivity. This will lead to individuals pursuing their self-interest with out fear of the government. Once the economy begins to grow rapidly, more emphasis should be put on education so that the people will be able to innovate. I do not think that religion plays a role in this. The fact that Buddhism does not value materials does not have anything to do with productivity. By doing these things, Laos can increase their GDP and recognize individual’s rights accordingly.
Contact me at mthong@radford.edu or melanie.thong@gmail.com