AGRICULTURE AND ECONOMIC GROWTH IN THE LAO PEOPLE’S DEMOCRATIC REPUBLIC: A SECTORAL TIME-SERIES ANALYSIS

Abstract

This study analyzes the nexus between the agricultural sector and economic growth in the Lao People’s Democratic Republic from a sectoral perspective, while also evaluating the roles of manufacturing, services, natural resources, and foreign direct investment in the growth process. Using a sectoral time-series model spanning 1989-2024, the study simultaneously investigates the long-run relationship and short-run dynamics among the variables. The results indicate the existence of a long-run cointegration relationship between economic growth and sectoral components. In the long run, manufacturing, natural resources, and agriculture exert positive statistically significant effects on economic growth, whereas the services sector shows a negative impact. In the short run, agriculture demonstrates a clear and positive contribution to economic growth. These findings suggest that enhancing agricultural productivity and value added, strengthening linkages with manufacturing, and gradually reducing reliance on resource extraction in order to reinforce the foundations of long-term economic growth in Lao PDR.