Facts on Science, Technology and Innovation

Content

Overview

Structure of the Research System

Key S&T Indicators

Overview

Lao People’s Democratic Republic (short “Lao PDR”) is a developing country and one of the fastest growing economies in the Asia and Pacific region, It is characterised by an industry and agriculture-oriented economy. The contribution of agriculture to GDP declines as everywhere else (27% as per 2015), but over 70% of employment are linked to the sector. The country’s natural resources include water, minerals and forests and the main agricultural products are rice along with corn, soybeans, cotton, tobacco, sugar cane and coffee. The gross domestic product (GDP) of the country has been growing at an average annual rate of 7-8% since 2005. Lao PDR’s growth path was hardly affected by the recent financial crises (World Bank, 2016). Lao PDR remains one of the least developed countries among the ASEAN economies because of several factors (including poor infrastructure, economic and social differentiation, lack of highly skilled labour, etc). The country’s economy has recently benefited from foreign direct investment (FDI) in its hydropower dams. Laos PDR’s economy still heavily depends on capital-intensive resource exports. However, certain aspects of the country’s development path have been highlighted as good practices including in social development: most notably the transition from subsistence to commercial smallholder farming, especially in rice.

As said, Lao PDR’s economy is still characterised by agriculture and industry to a larger extent than, for instance, in the case of its economically most relevant neighbour Thailand. Service sector contribution to GDP has grown in Lao PDR as it has around the globe. With 41% (2015) it stands at a level comparable to Cambodia, but is much less than in Thailand (52%). Agriculture contributes 27% to GDP, industry 31%. In 2010, employment in agriculture was reported at 71% of total employment. 8.3% of employment was in industry, 20.2% in services. Lao PDR’s labor force was about 3.4 million people in 2014 (World Bank, 2016). According to latest available data (ILO projections), the unemployment rate is pretty low in recent years: 1.4% (ILO 2016; World Bank, 2016). Over the last years, the inflation rate (consumer prices) was between 4 and 8%, with a more stable year 2015 where it was at 1.3%. According to the Corruption Perceptions Index 2015, Lao PDR occupies the 139^th position out of 167 countries. According to the Doing Business Index 2015, the country takes the 134^th place out of 189^th. These indicators point to aspects that still stifle economic and especially innovation development in Lao PDR.

Lao PDR is one of the smaller markets in ASEAN by means of annual foreign direct investment (FDI) inflows. Only Brunei has recently received less annual FDI. While Lao PDR’s inflows increased from US$ 279m in 2010 to US$ 1,220m in 2015, Brunei’s inflows increased to US$ 860m in 2012, but then decreased to US$ 170m in 2015. In terms of inward FDI stock, Lao PDR is still the smallest recipient in ASEAN (UNCTAD, 2016).

Lao PDR still lacks comprehensive and effective science, technology and innovation (STI) policies. However, there are a number of bodies, which facilitate and conduct research and development activities: Among them, the public sector institutions play a pivotal role: ministries, public research institutes and national universities.

Lao PDR was not indexed in the Global Competitiveness Ranking before 2013. Between 2013 and 2015, Lao PDR was indexed between rank 81 and 93. Overall, the country relatively improved its indicators in macroeconomic environment (from 93^rd to 70^th position) and financial market development (from 91^st to 74^th), whereas the indicators in goods market efficiency (from 54^th to 76^th) and in innovation and sophistication (from 74^th in 2013 to 103^th in 2015) deteriorated.

Pillars of competitiveness according to the Global Competitiveness Index	2011-2012 (out of 142)	2012-2013 (out of 144)	2013-2014 (out of 148)	2014-2015 (out of 144)	2015-2016 (out of 140)
Global Competiveness Index (GCI) Ranking	Not indexed	Not indexed	81	93	83
Basic requirements	-	-	83	98	86
1 Institutions	-	-	63	63	71
2 Infrastructure	-	-	84	94	98
3 Macroeconomic Environment	-	-	93	124	70
4 Health and primary education	-	-	80	90	90
Efficiency enhancers	-	-	107	107	106
5 Higher education and training	-	-	111	110	112
6 Goods market efficiency	-	-	54	59	76
7 Labor market efficiency	-	-	44	34	44
8 Financial market development	-	-	91	101	74
9 Technological readiness	-	-	113	115	119
10 Market size	-	-	122	121	109
Innovation and sophistication factors	-	-	74	80	103
11 Business sophistication	-	-	78	79	96
12 Innovation	-	-	68	84	108

Table 1 Lao PDR in the Global Competiveness Index 2011 - 2016
(See Schwab, The Global Competiveness Report 2011-2012, 2012-2013, 2013-2014, 2014-2015, 2015-2016, WEF)

In the Global Innovation Index, Lao PDR was inclued only in 2012 and was ranked at the 138^th position out of 144 countries. The country performed best in business sophistication (39^th) and worst in human capital and research. According to the latest available data, Lao PDR is the last of the ASEAN economies in the ranking. After 2012, Lao PDR was not indexed in Global Innovation Index any more.

Pillars of Innovation according to the Global Innovation Index	2011 (out of 142)	2012 (out of 144)	2013 (out of 148)	2014 (out of 144)	2015 (out of 141)	2016 (out of 128)
Global Innovation Index (GII) Ranking	Not indexed	138	Not indexed	Not indexed	Not indexed	Not indexed
Innovation input sub-index ranking	-	129	-	-	-	-
Innovation output sub-index ranking	-	139	-	-	-	-
Innovation efficiency ratio	-	135	-	-	-	-
1 Institutions	-	138	-	-	-	-
2 Human capital & research	-	140	-	-	-	-
3 Infrastructure	-	133	-	-	-	-
4 Market sophistication	-	109	-	-	-	-
5 Business sophistication	-	39	-	-	-	-
6 Knowledge & technology outputs	-	107	-	-	-	-
7 Creative outputs	-	139	-	-	-	-

Table 2 Lao PDR in the Global Innovation Index 2011-2016
(See Dutta et al., The Global Innovation Index 2011, 2012, 2013, 2014, 2015, 2016 INSEAD)

Structure of the Resesarch System

Science and technology policies and plans in Lao PDR are led by the Ministry of Science and Technology. The ministry has a major role in S&T-related policy-making and implementation and also oversees three public research institutes. Additional institutions in the research system are the Ministry of Agriculture and Forestry and the Ministry of Health overseeing the National Agriculture and Forestry Research Institute and the Pasteur Institute of Lao PDR, respectively. The National Agriculture and Forestry Research Institute (NAFRI) was established in 1999. It includes 11 research centres with 350 members in total. Generally, the main functions of the institute are to promote bio-diversity, to improve the agricultural productivity, to response to climate change and to inform provision to farmers. The Pasteur Institute of Lao PDR under the Ministry of Health was founded in 2007. The general objectives of this institute are to implement research activities, to promote public hygiene and to develop human resources.

Apart from these institutions and the Ministry of Science and Technology’s centres, research is also carried out at the National University of Laos, established in 1996. The university has almost 30 thousand students, studying in diverse faculties with the largest ones in engineering and in economics. The research performance of the university currently is still low, but it is planned to create new university-affiliated research institutes by 2020. The universities in Lao PDR are overseen by the Ministry of Education and Sports.

Figure 1. Organisational chart of S&T governance in Lao PDR
(source: https://www.jst.go.jp/crds/pdf/en/CRDS-FY2014-OR-02_EN.pdf, page 160)

The Ministry of Science and Technology is one of the main actors within the S&T governance structure in Lao PDR,. The ministry consists of seven departments (including science, technology/innovation, intellectual property, standardisation, IT, human resources, inspection and planning) and has three institutes: the Institute of Ecology and Biological Technology, the Institute of Renewable Energy and New materials and the Institute of Computer Science and Electronics. It hosts two offices and 18 science and technology bureaus at the provincial level. Overall, the ministry has more than 500 members. The ministry particularly focuses on three thematic areas: biotechnology and ecology, renewable energy and materials, and ICT. The main mission of the ministry is to apply scientific knowledge in order to reduce poverty and to overcome the status as “least developed country” by 2020. In order to implement this mission, five goals have been identified:

• Improvement of the organisational structure to promote policies
• Development of the legal system related to S&T
• Establishing of sustainable innovation infrastructure
• Development of human resources related to S&T
• Standardisation of local functions

Figure 2. Organisational Structure of Ministry of Science and Technology in Lao PDR

(source: http://www.most.gov.la/index.php/en/2012-01-04-07-13-53 )

Key S&T Indicators

Concerning S&T indicators in Lao PDR, hardly any reliable data is available. The information in the tables below provides the most up-to-date figures about population, GDP, foreign direct investments, number of publications and number of patent applications with domestic inventors. As shown, the GDP increased considerably over the period of the last five years with an average annual growth of 7.8% (relatively high even compared to the other ASEAN countries, most of which grow at an average annual rate of 4-5% of GDP). The last available data for gross expenditures on R&D (GERD) in Lao PDR dates back to 2002 with about US$ 2.7 million (or 0.04% of GDP). The latest available number of researchers also dates back to 2002 - 209 people were employed as researchers at that time. The number of researchers per one million of the population was 16, which is about the same level as Cambodia and Myanmar in 2002.

By other significant indicators, Lao PDR does not reveal high positions among ASEAN countries. By number of publications, Lao PDR has 1,670 citable documents (Scimago indexed 1996-2015). There is no significant patenting activity involving Lao-based inventors.

Indicator	2011	2012	2013		2014		2015
Population size (mill)	6.37	6.47	6.58		6.69		6.8
GDP (in billions) [1]	8.3	9.4	11.2		11.72		12.33
Total R&D exp	Not data available	--	--		--		--
GERD in %	Not data available	--	--		--		--
Government R&D exp	Not data available	--	--		--		--
Business R&D exp	Not data available	--	--		--		--
Total R&D pers (HC)	Not data available	--	--		--		--
No of researchers (HC)	Not data available	--	--		--		--
Researchers per million inhabitants (HC)	Not data available	--		--		--		--

Table 3 Key Indicators – Lao PDR’s economy, research, development

Indicator	Value	Year
Number of publications [2]	204	2015
Total early-stage entrepreneurial activity (TEA) rate	No data available	-
Flow of Inward FDI [3]	US$ 1,220m (€ 1,090m)	2015
Stock of Inward FDI [4]	US$ 4,850m (€ 4,350m)	2015
Flow of Outward FDI [5]	US$ 1m (€ 0.9m)	2015
Number of patent applications [6]	1	2003-2013

Table 4 Key indicators – Lao PDR’s business and research links

[1] Data from The World Bank (http://data.worldbank.org/); Current prices in US$ and € in ()

[2] Citables in Journals; Scimago 2016: http://www.scimagojr.com/countrysearch.php?country=mm

[3] UNCTAD World Investment Report 2016:http://unctad.org/en/publicationchapters/wir2016_AnnexTables_en.pdf

[4] Ibid.

[5] Ibid.

[6] A patent applications with inventors from Thailand; Degelsegger, Philipp: “Analysis of the ASEAN patent activity”, draft report, 2016, p.43

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