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GTAP Resource #7698

"The Impact of Least Developed Countries (LDCs) Graduation on Economy: Evidence from Lao PDR"
Authors: Phouphet, Kyophilavong, Konesawang Nghardsaysone, Phongsili Soukchalern and Inpaeng Sayvaya


Abstract
The graduation of Least Developed Countries (LDCs) is a crucial goal of the Lao development agenda. Lao PDR (Laos) is an LDC and aims to graduate from LDC in 2026. There are a few studies on this topic that use a CGE model in Laos. The objective of this paper is to investigate the impact of LDC graduation on the Lao economy using the Dynamic GTAP model (GTAP-Dyn). The GTAP database (version 11c) is used for this study. The simulation period is from 2027 to 2035. We divided the assessment into two main parts: baseline and policy scenarios. We simulate five Policy Scenarios: (1) Tariff Policy Shock; (2) Productivity Shock; (3) Foreign Direct Investment (FDI) Shock; (4) Official Development Assistance (ODA) Shock; (5) combine 1 to 4 simulations (the total impact of LDC graduation). The simulation of results showed that LDC graduation has a negative impact on the Lao economy. GDP, welfare, industrial output, exports, imports, and household income. Therefore, it is crucial for the Lao government to strengthen institutional capacity, pursue domestic reforms, diversify, promote trade and FDI, improve trade facilitation, reduce domestic NTMs, and promote bilateral FTAs to mitigate the negative impact of LDC graduation.



Resource Details () GTAP Keywords
Category: 2026 Conference Paper
Status: Published
By/In: Presented during the 29th Annual Conference on Global Economic Analysis (Kyoto, Japan)
Date: 2026
Version: Paper
Created: Phouphet, K. (4/4/2026)
Updated: Phouphet, K. (4/5/2026)
Visits: 27
- Economic development
- Economic growth
- Foreign direct investment
- Dynamic modeling
- Asia (East)


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Posted by: Phouphet, Kyophilavong   4/5/2026 12:18:00 AM
The objective of this paper is to investigate the impact of LDC graduation on the Lao economy using the Dynamic GTAP model (GTAP-Dyn). The GTAP database (version 11c) is used for this study. The simulation period is from 2027 to 2035. We divided the assessment into two main parts: baseline and policy scenarios. The policy scenario included (1) Tariff Policy Shock; (2) Productivity Shock; (3) Foreign Direct Investment (FDI) Shock; (4) Official Development Assistance (ODA) Shock. The simulation of results showed that LDC graduation has a negative impact on the Lao economy. GDP, welfare, industrial output, exports, imports, and household income. Therefore, it is crucial for the Lao government to strengthen institutional capacity, pursue domestic reforms, diversify, promote trade and FDI, improve trade facilitation, reduce domestic NTMs, and promote bilateral FTAs to mitigate the negative impact of LDC graduation.
This paper has been accepted for presentation at the 29th Annual Conference on Global Economic Analysis at the Kyoto International Conference Center, Kyoto, Japan.





Last Modified: 4/20/2026 1:44:43 PM