Empirical Research On FDI In Power Industry In Lao PDR

Lao People's Democratic Republic, also known as Laos, it's a socialist developing country located in Southeast Asia, it is bordered by China to the north, Vietnam to the east, Cambodia to the south, Thailand to the west and Myanmar to the northwest. In the past 10 years, Laos has been developing a poverty reduction plan for 2020, and has become Southeast Asia's main energy provider, getting named "the battery of Southeast Asia". Laos has largely resources, and made substantial efforts to attract foreign investments, making Lao energy resources the main means of stimulating economy growth. The introduction of foreign direct investments in Lao Power industry is not only played a role in the replenishment of constructions, but also has brought advantages to the domestic economic development and strategies of national development.This paper first addresses the four main theories of foreign direct investment, namely the Comparative Advantage theory, the Monopolistic Advantage theory, the Internalization Theory, and International Production Compromise Theory. Through case study on the theories of the thesis and an analysis of the situation in Laos, the conclusion resulted that the energy industry is an important attraction of foreign direct investments. A complete analysis of the foreign investment in the energy sector was then carried out, including the different phases of development of the Power sector, the motives of foreign investment in the sector, the types of investments in Power industry, and the investment structure analysis. The factors affecting the FDI, the effects of FDI were researched through literature analysis. A multiple linear regression was then carried out to test the importance of the FDI. The results show that the level of development, the openness of the power sector, and the average wage play an important role in the foreign investments in the power industry. Finally, reviewing the results of the empirical analysis and the different influencing factors, then conclude the problems of foreign direct investment in the power industry of Laos, and proposes development suggestions.