GTAP Resources: Resource Display
| GTAP Resource #7866 |
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"Future Trade Integration, LDC Graduation, and Lao Economic Development: A General Equilibrium Analysis" Authors: Chanthavong, Sinthavanh Abstract PMLao People's Democratic Republic (Lao PDR) is scheduled to graduate from Least Developed Country (LDC) status in 2026, triggering the withdrawal of European Union (EU) Everything But Arms (EBA) preferences. This transition precipitates a sandwich effect characterized by rising tariff barriers and intensified competitive displacement from regional peers. We evaluate the resulting structural and welfare shocks using a sequenced approach that links structural gravity estimations with a Global Trade Analysis Project (GTAP) Computable General Equilibrium (CGE) framework. The empirical results reveal a fundamental decoupling between macroeconomic resilience and micro-sectoral vulnerability. First, a reversion to Most Favored Nation (MFN) tariffs (8.00%) drives a highly concentrated 27.8% destruction in EU-bound exports, causing a severe 38.3% hollowing-out of the labor-intensive apparel sector. Second, while integration via the Regional Comprehensive Economic Partnership (RCEP) provides a macro-level rescue by expanding aggregate exports by 5.583%, it fails to offset a national welfare loss of 0.014% due to terms-of-trade compression. Third, although securing GSP+ access mitigates the direct tariff shock, strict double-transformation Rules of Origin (RoO) act as a binding technical bottleneck. We conclude that graduation forces a structurally uneven pivot from Western apparel corridors toward capital-intensive regional markets, requiring targeted productivity upgrades to bridge the gap between aggregate resilience and industrial readiness. |
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- Bridging CGE and new quantitative trade (NQT) literature - Multilateral trade negotiations - New quantitative trade models - Preferential trading arrangements - Trade in textiles and wearing apparel - Asia (Southeast) |
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Public Access  Future Trade Integration, LDC Graduation, and Lao Economic Development: A G (3.0 MB) Replicated: 0 time(s)Restricted Access No documents have been attached. Special Instructions No instructions have been specified. |
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Last Modified: 4/30/2026 11:03:22 AM
