No.863 Impacts Trade Liberalization in the Least Developed Countries: Evidence from Lao PDR
by Phouphet KYOPHILAVONG and Kazunobu HAYAKAWA
This study empirically investigates the effects of tariff reductions in a least developed country on its economy. Specifically, we focus on tariff reductions based on the ASEAN Free Trade Area (AFTA) in Laos. First, we analyze how the reduction of AFTA tariff rates in Laos affects Lao imports from AFTA member countries. Our main finding is that the reduction of AFTA tariffs in Laos does not significantly change Laos’ imports. Second, we investigate their effects on plant-level employment. Consistent with the observation of a negligible change in Laos’ imports, we find no significant changes in plant-level employment. In short, although Laos decreased its tariff rates against other AFTA members, imports from them did not significantly increase, and no significant changes occurred in employment. We discuss several possible reasons for these insignificant effects.
Keywords: LDC, Lao PDR, Tariffs
JEL classification: F15, F53
Please note that discussion papers are works in various stages of progress and most have not been edited and proofread and may contain errors of fact or judgment. Revised versions of these papers may subsequently appear in more formal publication series. The views expressed in this publication are those of the author(s). The IDE does not guarantee the accuracy of the data included and accepts no responsibility for any consequences arising from its use.