The Analysis Of Laos-Sino Trade Impact On Laos’ Economic Growth

The general international trade theory points out that the economic growth of a country will be significantly affected by global economic fluctuation if this country shows an increased dependence on foreign countries in the economic field. After Lao government adopted reform and opening up policy in1986, many exciting changes could be seen in Lao PDR. Now, although Laos is still a poor country, no one can ignore that Laos has made tremendous achievements during the last26years. In this process, China has a positive influence on Laos’economic growth. China has become increasingly important to Laos’foreign trade. With the rapid growth of GDP, the status of foreign trade in Laos’economic growth is getting more imperative than before. Laos’ratio of dependence on foreign trade with China increased from4.67%in1994to31.08%in2009. This thesis is divided into five chapters.(1) Discussion on the research background, methods and guidelines as well as innovative points of the thesis.(2) Based on the theories, the thesis analyzed the mechanism of the function of foreign trade to promote economic expansion. This thesis, considers the impact or causation of human capital accumulation and technological progress oneconomic expantion. Also, explaination is provided on over-reliance on foreign trade which will expose the entire economy to more risks and affect stable and sustainable economic development.(3) Discussion on the Laos-China Trade Cooperation such as the Present Status of Laos-China trade Cooperation, The Analysis of Trade Structure between Laos and China and The Analysis of Total Trade Volume between Laos and the China (5) On the basis of the analytical results of the previous sections, impact of Laos-Sino trade on Laos’ economic growth is further examined. Advanced econometric methods of time series analysis, such as co-integration test, Granger causality test and error correction model, have been adopted to analyze the impact of total trade, and export, import between Laos-Sino trade on Laos’economic growth. As the same time the Analysis of the Degree of Laos’Foreign trade Dependency on China is analyzed.(5) Conclusions and Suggestions, such as whether Laos should import advanced technology from China, Strengthen bilateral trade and if China would pay more active role in Laos’Economy Development.