Are Laos’ Land-Linking Dreams a Risky Bet?

The Lao government aspires to gain centrality in the Greater Mekong Subregion via new infrastructure; but at what price?

The Lao government is strongly pushing ahead with different projects to better connect the country to the main transport networks of the region and integrate it into global value chains. Laos’ landlocked position and natural topography has historically led to its isolation and been a serious obstacle for development. During the French period, the colonial authorities developed plans to “unblock” Laos’ economic potential by building a network of all-weather roads and railways to link it to Vietnam; however, those aspirations were never realized.

Similarly, in the last decade the Lao government has asserted the necessity to transform the country “from a landlocked to a land-linked one,” making this objective the cornerstone of its transportation policy and, more broadly, the guiding light for the nation’s economic development. Despite the significant GDP increase that Laos has witnessed in the last few years (with an average GDP growth of 7.7 percent on an annual basis), the Lao ruling party is persuaded that the connectivity improvement is one of the keys to trigger the country’s unexpressed growth potential. In line with this belief, the Lao leadership has recently given the green light to a series of mega-projects. 

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Fabio Figiaconi