Economic growth is important, but it is just one aspect of development. Policy makers are required to reconcile economic, social and environmental objectives in order to ensure that their country’s development path is sustainable and that the lives of its citizens improve. At the same time, achieving these economic, social and environmental objectives requires strategies for reform that factor in any complementarities or trade-offs across policies that may be needed. It requires the mobilisation of financial resources from various sources and directing these resources towards activities that promote sustainability across different sectors.
The Multi-dimensional Country Reviews (MDCRs) of the Organisation for Economic Co‑operation and Development (OECD) provide governments with reliable policy advice for their national development strategies. They also identify the transitions necessary for more equitable and sustainable national growth, and they propose priorities for policy intervention. This report aims to provide guidance to Lao People’s Democratic Republic (Lao PDR) in relation to financing its sustainable development plan and achieving the ambitions set down in the country’s 9th Five-Year National Socio-Economic Development Plan (2021-2025) and the associated Financing Strategy.
This report combines a diagnostic approach to development with consideration of how that development can be financed. It also provides suggestions for priorities and policy actions for both aspects. Chapter 1 provides an overview of the report. Chapter 2 combines participatory visioning and foresight methods with traditional development analytics, including the OECD Framework for Measuring Well-Being and Progress, as well as benchmarking and comparison of the results and experiences of other countries. This diagnostic proposes transitioning from commodity-driven growth to a more inclusive prosperity paradigm that emphasises the creation of broad-based opportunities, human capital development and green sustainability.
Based on the above, this report discusses priorities and recommendations for financing Lao PDR’s sustainable development. The diagnostics and recommendations in these chapters build on the OECD’s established Transition Finance Toolkit, country tax policy analysis, investment policy framework and foreign direct investment quality indicators, and the Climate Change Data Ecosystem approach by the Partnership in Statistics for Development in the 21st Century (PARIS21). Chapter 3 reviews Lao PDR’s financing trajectory and provides recommendations for ensuring sustainable flows of financing; Chapter 4 provides recommendations for a radical overhaul of Lao PDR’s tax system and how the country translates investments and economic revenue into resources for development; Chapter 5 identifies actions for attracting the type of investment that can underpin sustainable and balanced growth; and Chapter 6 lays out a road map for building green data and statistics as a core capacity for mobilising green finance flows.
Benchmarking and comparing results and experiences with other countries are key elements of the OECD method. For each MDCR, a set of comparator countries is designed to include regional peers, countries from other regions with similar structural characteristics, and OECD member countries. Throughout this report, depending on data availability, Lao PDR is compared with a set of benchmark countries in Asia (Cambodia, Korea, Thailand and Viet Nam), with averages for Association of Southeast Asian Nations (ASEAN) Member States and beyond (Albania, Plurinational State of Bolivia (hereafter Bolivia), Botswana, Colombia, Czech Republic (hereafter Czechia), Ghana and Paraguay), as well as with averages for OECD member countries.