The Analysis Of Foreign Direct Investment On Lao’s Industrial Productivity

Over the past decade Asia’s economic movement has been enlarged as a very strong condition around the globe. Laos even is only a small developing country but also has been affected in both direct and indirect ways on this growth and expending. Laos herself is on the way to graduate from the Least Development Country (LDC), so one the most important method is the industrialization under the expending of Foreign’s trade and investment in Laos. This thesis will econometrically studies on whether Lao’s major government investments have been on the right track and if is it true that Foreign Direct Investment (FDI) really has the important affected on the Lao’s industrial productivity. I employ an augmented Cobb-Douglas production function and the time series data on the Lao’s government investment expenditure and the FDI from1990to2009. The final result would show that the ambitious for Lao country to reach the level of industrialization and modernization which encourage by the good works of Lao’s government are mostly on the right track. However, some of the strategies have to be improved such as the technology progress and increasing the quality of transportation infrastructure. The result also indicates that the FDI has a good affect and truly stimulates the industrial productivity of the Lao PDR.