The Role of Public Sector Investment for Economic Development in Emerging Countries: The Case of Lao PDR

Recently, the Lao PDR has achieved high economic growth at around 7-8 percent annually which is very stable and robust growth in Asian economic dynamics, in particular in ASEAN. Vital public investments play an important role to develop social infrastructures and then strengthen the supply-side economy. This paper analyzes the macroeconomic structure and causes of high economic growth of Lao PDR by utilizing a macroeconometric model. According to the econometric analysis, vital public sector investment behaviors have caused to strengthen the supply-side economy and exports, which resulted in foreign capital and public investment increases through its virtuous circle.