From subsistence to market economy

This paper examines the development of ten villages along the Mekong River in Laos during the period 1994 to 2001. These villages have been sampled two times, the first in the period 1994-1997 and the second in 2001. I look at changes in production, economic conditions, and the general well-being of the households. General trends points to a strengthening of the Laotian economy. The governments program aims to reduce poverty by half to 2005, and to maintain positive economical trends. The total material consists of about 150 variables for each village, covering agricultural activity, land areas available and their uses, market economic activity, income figures, bank loans etc. For my purposes here, I have selected variables such as production or work activity, income, and household economic status levels as well as land use, level of rice production, among other variables. The data was collected by a team of researchers from the Swedish Agricultural University (SLU). They made their raw data available to me. The data has not been analyzed previously. The hypotheses guiding my research have been: (I) The villages have shifted from subsistence economy toward a market economy. That is, the village’s production activities have changed between the first survey and the second. (II) As the country undergoes a strengthening of the market economy and households engage in market activities, household as well as village income can also be expected to increase over time. (III) In each village, the village council classifies the households in the village, according to their economic status or well-being and these judgments will show that individual households on the average for a village to be better off in the second study compared to the first. For the purposes of addressing these hypotheses, I developed indicators of production activities, income levels, and economic status or wellbeing. My results shows an increased market activities and labor specialization – that is, as the range of activities of village households declined at the same time that labor activity was constant. The income of the households has increased overall. Two of the sampled villages increased their income considerably more than the other villages. I conclude that this derives from a specialization in animal husbandry. The assessments of village councils of households are that their well-being increased from the first to the second sample points. These results suggest that Laos’ transition to a market economy and its economic development is reflected in the production, economic conditions and well-being of the households and villages in my study.