Menon, Jayant2004-04-062004-05-192011-01-052004-05-192011-01-051998http://hdl.handle.net/1885/40473http://digitalcollections.anu.edu.au/handle/1885/40473The Lao People’s Democratic Republic (PDR) is a transitional economy, and one of the few least developed economies in the Southeast Asian region. Laos became a member of ASEAN in July 1997, and will participate in the ASEAN Free Trade Area (AFTA) from 1 January 1998. This paper examines the likely impact of AFTA membership on Laos’s trade, government revenue and foreign investment flows. It is found that: (i) trade diversion is likely to be low, and that AFTA will provide the vehicle to negotiate market access issues with Thailand; (ii) the reduction in government revenue from trade taxes is likely to be low, particularly in the light of the high share of informal trade and low levels of trade diversion; and (iii) foreign direct investment (FDI) flows are likely to grow sharply, as the legal, administrative and institutional framework in Laos develops to meet the ASEAN standard.188670 bytes352 bytesapplication/pdfapplication/octet-streamen-AULaosASEANtrade revenueinvestmentPDRPeople's Democratic RepublicAFTAASEAN Free Trade AreaFDIforeign direct investmentLao economy1998