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Economist: GDP growth yet to trickle down
Laos has achieved remarkable GDP growth over the past five years but that does not mean that everyone is getting wealthier, a senior economist has said.
“GDP growth should not be used as a tool to measure the level of national wealth,” Lao National Economic Research Institute Director General, Dr Liber Libouapao, told the Vientiane Times this week.
He said the government had assigned the institute to develop a new tool to measure national wealth in place of GDP growth, as Laos prepares to free itself from Least Developed Country status by 2020.
“The United Nations will make the decision as to whether Laos can rise above Least Developed Country status by 2020, not us,” he said. He stressed that it was important to know the main UN criteria for developing nations, so that Laos can accurately measure its progress towards these goals.
Dr Liber said the Economic Research Institute would conduct a study on Gross National Income (GNI), explaining that the GNI growth rate reflects the wealth of Laos more accurately than GDP growth.
GDP growth includes foreign development projects in Laos while the GNI consists solely of Lao development projects in Laos and other countries, he said. The Lao GNI could be much lower than GDP growth because the latter is being driven to a significant extent by foreign investment projects.
Dr Liber said that another indicator to consider in terms of the well-being of the population is the Human Development Index. True development should not only be viewed in terms of infrastructure development, which is not necessarily related to the happiness and wellbeing of the Lao people, he said.
“To fulfill the Human Development Index criteria, people must have at least a secondary school education, not just primary schooling,” he said, adding that the health and quality of life of the Lao people must improve in parallel with the country's increasing wealth.
Another important UN criterion is the volatility of economic growth, he said. Economic growth in Laos is at risk of fluctuating rapidly due to the country's dependence on the export of natural resources, which would some day be exhausted.
Laos should develop its non-resource sector and diversify its economic base to ensure sustainable economic growth. The country should ensure it permits only high quality investment projects that have little impact on the environment.
According to the World Bank, economic growth in Laos is projected to reach 8 percent in 2011, with revenue from hydropower the main engine of growth. Manufacturing, agriculture and mining contribute only a small share of GDP growth.
Mining output slowed this year after the government stopped granting new licenses, but the sector's contribution to GDP is expected to see a minor increase in 2012.
vientiane times
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