Lao Wisdom as “Buffer State” in an Emerging Mekong Regional Economy – How a Small Country Behaves among Big Countries –

Abstract

Lao PDR, located in a geopolitically strategic area of the Mekong region, has served as a “buffer state” without being placed under any one country's influence, contributing to the status quo of regional power balance. The skillful balanced diplomacy of Lao PDR has enabled it to keep this position. Yet, in face of growing Chinese presence, how long will that be the case? With an emerging regional economy across borders in the Mekong region as the background, Lao PDR, a small, land-locked country, has achieved relatively high economic growth rates and has started to attract foreign direct investment in recent years. In this process, Japanese companies have started to invest in manufacturing there, and Japan-Laos business partnership has been taking off. Looking for further development, Lao PDR has been consolidating its position as the “battery of the Mekong,” a net exporter of electricity. By improving its connectivity with neighboring countries, Lao PDR has also been making untiring efforts to become a “land-linked” country, aiming to serve as a “logistic hub” for the region, taking advantage of its geopolitical advantage, Yet, many challenges exist before this goal is achieved.