Economy of Laos

The economy of Laos is a lower-middle income developing economy. Being a communist state, the Lao economic model bears some resemblance to the Chinese and Vietnamese economies, in that it has implemented market-based economic practices while maintaining a degree of state control and welcoming foreign direct investment.

Following the Civil War, Laos established a Soviet-type planned economy. As part of economic restructuring that aimed to integrate Laos into the globalized world market, the country underwent reforms called the "New Economic Mechanism" in 1986 that decentralized government control and encouraged private enterprise alongside state-owned enterprises. As of 2007, Laos averaged 8% a year in GDP growth. It was forecasted that Laos would sustain at least 7% growth through 2019.

The key goals for the government included pursuing poverty reduction and education for all children, with an initiative to become a "land-linked" country. This was showcased through the construction of the nearly $6 billion high-speed rail from Kunming, China to Vientiane, Laos. The country opened a stock exchange, the Lao Securities Exchange, in 2011, and has become a regional player in its role as a hydroelectric power supplier to its neighbors China, Thailand, and Vietnam. The Lao economy relies on Foreign direct investment to attract capital from overseas. The long-term goal of the Lao economy, as enshrined in the constitution, is economic development in the direction of socialism.

Laos has hydropower resources; the country has potential for hydro- and solar power. Excess electricity from hydropower is exported to other countries. The country relies on coal in its electricity production.