The second Lao PDR investment climateassessment identifies the key constraints of thecountry's non-resource sector firms. This Assessmentsummarizes the results of a national survey conducted inlate-2009 and draws on extensive interviews withpolicymakers and practitioners. Survey results reveal thenature of constraints that various non-resource sector firmsin Lao PDR currently face. The results provide an analysisof the firms' performance and productivity. Supportingan international exchange of knowledge, this survey'sresults have been compared to numerous studies conducted bythe World Bank in over 100 developing countries, which sharesimilar methodological approaches. Due to rapid economicgrowth in recent years, Lao PDR has emerged from low incometo middle-income country status in 2011, according to theWorld Bank. The development of the non-resource sector isessential to ensure sustainable and inclusive growth in LaoPDR. Non-resource sectors are more stable than resourcesectors, and provide more long-term employment. The nonresource sector is expected to contribute more than half ofLao PDR's real Gross Domestic Product (GDP) growth and75 percent of the GDP in the medium-term. To achieve theseresults, policies in Lao PDR should focus on creating apositive enabling environment and that supports thedevelopment of the non-resource sectors. Based on LaoPDR's per capita income, this assessment's surveyanalysis demonstrates that labor productivity is lower thanin neighboring countries and lower than in countries with asimilar level of income. Labor productivity in Lao PDR isslightly lower than in Cambodia and Vietnam andsignificantly lags behind the leading countries in theregion such as China, Malaysia and Thailand. Even thoughlabor costs are low in Lao PDR, data suggests that nationalunit labor costs are roughly comparable to many comparatorcountries, but are higher than in China and Thailand.
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