The economies of the five Lower Mekong countries range from those still developing beyond a reliance on agriculture and natural resources to more diverse export-oriented economies.
Source: World Bank. GDP at market prices 2014 (current US$). Created by ODI December 2015. Licensed under CC BY-SA 4.0.
The combined total GDP for the Lower Mekong was US$684.1 billion in 2014 according to World Bank data.1 While recent variances in population reporting for Myanmar make GDP per capita figures unreliable, the average for the other four countries in the region in 2013 was US$2,684 (nominal).2 For the 2015 fiscal year, the World Bank categorized Cambodia and Myanmar as “low-income” economies, Laos and Vietnam as “lower-middle-income” economies and Thailand as an “upper-middle-income” economy. These categories use gross national income (GNI) per capita to group countries into four different levels.3
A current account balance is the difference between a country’s savings and its investments. Vietnam’s current account balance increased each year from 2010 to 2013, while all other countries’ balances decreased annually. In 2013, the average current account balance of the Lower Mekong countries was 7.8% of GDP, ranging from 29.5% for Laos to 6.5% for Vietnam. Total commercial exports from the Lower Mekong grew almost 200% in the ten years from 2004 to 2013 (2004: US$128.47 billion; 2013: US$382.66 billion). With the exception of Vietnam, all Lower Mekong countries had a current account deficit at the end of 2013.4
As shown in the chart below, in 2013, the total net trade in goods and services for the Lower Mekong region was US$16,426.8 million.5 Almost half of all exports (48.9%) from the five Lower Mekong countries in 2013 went to high-income countries, down from 63% in 2003.6 Top export partners for the three countries with available data—Cambodia, Thailand and Vietnam—included the United States, China and Japan.7
Apart from Thailand, which began repaying its development loans in 2000, the other economies in the region rely heavily on aid and development assistance. Myanmar’s economy has had greater access to aid and development assistance since its former military government announced moves towards more democratic processes in 2012, lifting long-standing embargoes on trade from Western governments.
Tourism revenue is important to the economies of several Lower Mekong countries, especially Cambodia (13.5% of 2014 GDP), Thailand (8.6% of 2014 GDP) and Laos (5% of 2014 GDP), and is an increasing contributor for Myanmar.
The region’s wealth of resources, young populations, improving infrastructure, and expanding markets, make it attractive for investors. However, while the Lower Mekong is seen as an area of potential growth and foreign investment opportunity, individual scenarios in some countries—for example, Myanmar’s internal conflicts with various indigenous and ethnic groups, Thailand’s military coups and civil unrest, Vietnam’s maritime territorial dispute with China, and Cambodia’s well-publicized land conflicts—have seen investor confidence fluctuating in recent years. The low rankings of some countries on corruption indices, such as Transparency International’s annual Corruptions Perception Index 8, may also affect investment.
Myanmar is eager to capitalize on the new trade freedom it has experienced since 2012. While the government has set goals to improve infrastructure in order to encourage both tourism and foreign investment, continuing sectarian and domestic conflict in the country is still a concern for tourists and investors alike.
Transport, a regional investment priority, was highlighted in the Greater Mekong Subregion Strategic Framework for 2012-2022, developed by representatives of China and the five Lower Mekong nations in 2011.9 It identified 92 projects costing an estimated US$30 billion, 90% of which were transport sector projects. The expansion of transport is considered key to increasing trade in the region.
While past economic development policy has emphasized open markets and large-scale trade, more recent pro-poor development initiatives have pushed for policy aimed at removing inequalities in income and living standards.10
Last updated 9 May 2016
- 1. World Bank. “GDP at market prices (current US$)”. Accessed 22 December 2015. http://data.worldbank.org/indicator/NY.GDP.MKTP.CD
- 2. United Nations Statistics Division. 2013. “National Accounts Main Aggregates Database.” Accessed 4 January 2015. http://unstats.un.org/unsd/snaama/selbasicFast.asp.
- 3. The World Bank. 2015. “Country and Lending Groups.” Accessed 9 April 2015. http://data.worldbank.org/about/country-and-lending-groups.
- 4. Asian Development Bank. “Viet Nam: Economy.” Accessed 9 April 2015. http://www.adb.org/countries/viet-nam/economy.
- 5. The World Bank. “Net trade in goods and services (BoP, current US$).” Accessed 10 April 2015. http://data.worldbank.org/indicator/BN.GSR.GNFS.CD
- 6. The World Bank. 2015. “World Development Indicators, Direction of Trade of Developing Economies.” Accessed 16 June 2015. http://wdi.worldbank.org/table/6.4.
- 7. Global Edge. “Trade Insights by Country.” Accessed 17 June 2015. http://globaledge.msu.edu/global-insights/by/country.
- 8. Transparency International. 2014. “Corruptions Perceptions Index 2014.” Accessed 1 July 2015. http://www.transparency.org/cpi2014/results.
- 9. Asian Development Bank. 2011. The Greater Mekong Subregion Economic Cooperation Program Strategic Framework (2012-2022). Manila: ADB. Accessed 30 March 2015. http://www.adb.org/documents/greater-mekong-subregion-economic-cooperation-program-strategic-framework-2012-2022.
- 10. Hill, Hal. 2014. Is There a Southeast Asian Development Model? Germany: University of Freiburg. Accessed 21 July 2015. http://www.vwl.uni-freiburg.de/iwipol/discussion_papers/DP26_Hill_Is_There_a_Southeast_Asian_Development_Model.pdf.