Road Improvement and Poverty Reduction in Laos

Laos is a mountainous country with poor roads and a high rate of poverty incidence, especially in rural areas. It is obvious that better roads could reduce poverty, but by how much? And what forms of road improvement reduce poverty the most? The economic effects of road improvement are complex and multi-channeled. This paper uses a multi-household general equilibrium modeling approach to study these issues. The results indicate that road improvement does reduce poverty but that the quantitative impact depends heavily on the types of road that are provided and the areas in which the road is located.