Written by Mekong Institute

Foreign Direct Investment (FDI) has played a crucial role in the socioeconomic development of Lao PDR. It significantly enhanced the standard of living of people in the rural areas and contributed in the reduction of poverty. Over the years, people in the Northern part of Lao PDR gained advantage from the foreign investment from China.This paper focuses on investigating the impact of Chinese investment on agricultural export and poverty reduction by using Nasavang Village and Mainatao Village, in Oudomxay as the case study conducted in 2009 and 2011. The findings of the paper indicate that investment inflow from China substantially contributes to the improvement of the socioeconomic development in the observed areas. The villagers could receive capital inflow and technological transfer in various plantations. It, thus, leads to empower the agricultural exports to Chinese market. Moreover, there was a significant increase in household income last 2010. The household income per capita in Nasavang and Mainatao increased by two and ten folds, respectively. More importantly, investment inflows from China reduced the number of poor households in the villages by almost half of the total number of households compared to 2008.