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State Capitalism and vulnerable livelihoods in Lao PDR

Dr. Edo Andriesse , International College, Khon Kaen University, Thailand. State Capitalism and vulnerable livelihoods in Lao PDR. Is state capitalism a suitable recipe for overcoming Laos’ position in the economic and geographical periphery of Southeast Asia?

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State Capitalism and vulnerable livelihoods in Lao PDR

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  1. Dr. Edo Andriesse, International College, KhonKaen University, Thailand State Capitalism and vulnerable livelihoods in Lao PDR

  2. Is state capitalism a suitable recipe for overcoming Laos’ position in the economic and geographical periphery of Southeast Asia? How could development corridors not only lead to economic growth, but also to a reduction of inequality and social exclusion? Two Major questions

  3. The BesT Consensus

  4. Japan and South Korea complemented this with side payments to weaker parts in society: rice farmers, small and medium enterprises, regions lacking high growth industries and industries in decline. Income inequality is now relatively low in Japan and South Korea. Best Consensus

  5. Human Development in Southeast Asia

  6. HDI value trend

  7. Rehbein (2007: 72-73) “While the habitus of most Lao is still firmly rooted in the rural past, it is now being exposed to radical changes and is under pressure to adapt to the market economy… And even if they succeed in adapting to the market economy, Lao often adhere to traditional conceptions of time, work, happiness and behavior that are hardly compatible with the ‘spirit of capitalism.” Profound MisMatch

  8. Poverty and literacy

  9. Incoming FdI 2003-2008 (%)

  10. Little employment generation Displaced citizens due to dam building and new mining sites Insufficient attention paid to small and medium enterprises (SMEs). For instance, there is no process of securing dynamic comparative advantages in the garment industry Impact of FDI

  11. Landlessness due to set up of large scale plantations. In Chinese rubber plantations in Northern Laos villagers usually receive 30% of the profits; the companies 70% (Shi 2008). Impact of FDI

  12. Corridor Development Kunming N-S Corridor High speed railway Mawlamyine Danang EWEC Dawei

  13. Institutional mismatch: ADB thinks of corridors in a Washington Consensus fashion whereas Lao PDR and other countries have more the BEST Consensus in mind; particularly the Chinese model. Cornford (2006) on EWEC: road improvements in Savannakhet have in fact led to higher inequality between relatively well off urban based Lao Loum people and relatively deprived rural Lao Theung people. Corridor development

  14. If really implemented, it will seriously reduce the likelihood of a successful EWEC as it makes the Mawlamyine deep seaport redundant. In that case Bangkok’s position will be strengthened rather than peripheries in the GMS. DaWEI?

  15. Is state capitalism a suitable recipe for overcoming Laos’ position in the economic and geographical periphery of Southeast Asia? Yes, but more attention should be paid to firms’ capabilities (especially SMEs) and side payments to disadvantaged groups in society More relation-based institutions are required (Bardhan 2005) Conclusions

  16. How could development corridors not only lead to economic growth, but also to a reduction of inequality and social exclusion? Focus more on productive aspects, for instance insertion in global value chains. Need for complementary social policies (notably education). Conclusions

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