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3.0. The Lao Economy and Poverty
3.1. Developments of the Lao economy
Since introducing the New Economic Mechanism (NEM) in 1986, Laos has been
transitioning from a centrally planned economy to a more market-oriented economy. As a
result, except during the Asian financial crisis of the 1990s, Laos has been achieving high
economic growth. Economic growth averaged about 8.02% over 2006–2011, faster than the
previous periods, namely, 6.24% in 2001–2005, 6.17% in 1996–2000, and 6.28% in 1990–
1995 (Table 3-1).
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The rapid growth has enhanced the industrialization process. Laos GDP in
2010 was US$8.3 billion, dominated by the agricultural sector (30.3%), followed
by industry
(27.7%) and services (42%). The industrial sector has grown by more than 10% since 2002,
causing the weight of agricultural in the economy to decline. Population growth gradually
decreased from 2.71% in 1990–1995 to 1.58% in 2001–2005 and to 1.48% in 2006–2011.
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