Over the past three decades, Laos has seen its economy grow and social conditions improve. The Southeast Asian country’s human development index value rose 57 percent from 0.346 in 1985 to 0.543 in 2012. In the same period, life expectancy increased by 16 years and gross national income per capita more than tripled.
But despite this progress — and the country’s transition into a market economy — Laos remains one of the most poverty-stricken countries in the Mekong region. Wide income disparities between urban and rural areas remain a problem, and about one-third of the population lives below $1.25 a day.
More than 80 percent of Laotians live in remote rural areas in the southeast, close to Vietnam, where access to all-season roads, basic services and markets are limited. The government of Laos has shown low institutional and financial capacity to provide basic services in rural areas. Environmental shocks like droughts and floods are also common in many rural areas.