Souknilanh Keola

Impacts of Cross-Border Infrastructure Developments: The Case of the First and Second Lao—Thai Mekong Friendship Bridges

In 1992, with assistance from the Asian Development Bank (ADB), six of the countries in the Great Mekong Subregion (GMS) launched a program of regional economic cooperation (the GMS Program). The main objective of the program is to promote economic development through cross-border economic cooperation, that is, economic integration, between Cambodia, Lao PDR (Laos), Myanmar and Vietnam, Thailand and Yunnan Province.1 The development of transnational economic corridors lies at the heart of strategies to achieve this objective (ADB 2004, p. 5). Nonetheless, the development of Mekong bridges is essential for onland linkages in GMS where the Mekong River flows from North to South. In fact, the majority of economic corridors in the GMS program have one of their sections over the Mekong River. Since the early 1990s many Mekong bridges have already been constructed, are under construction or planned, in Cambodia, Laos, Thailand and Vietnam.

Location Choice of Multinational Firms in CLMV Countries

In the present global era, in which firms choose to locate their plants beyond national borders, location characteristics become important for attracting multinational enterprises (MNEs). MNEs have distributed their overseas production plants all over the world and have formed international production/distribution networks. However, the distribution of their overseas affiliates around the world is not necessarily uniform. Only a limited number of locations succeed in attracting a large number of MNEs because MNEs base decisions on their location abroad by taking into consideration several location characteristics, such as market size, extent of infrastructure development, or existence of industrial concentration. As a result, the location choices of MNEs yield large differences in inward foreign direct investment (FDI) among locations. Such a gap might lead to a widening of the gap in economic development among locations, because the entry of MNEs is expected to give birth to various kinds of positive benefits, such as spillover effects, to the location. Therefore, it is crucially important to understand the detailed mechanics of the location of MNE overseas plants.

Economic Integration and Industrial Location in Laos: How Has Border Mattered?

After a nearly two centuries of struggle for independence and civil war, Laos1 became a politically integrated and independent state once again in 1975.2 However, Laos was and is still far from becoming a unified market. Major cities are separated not only by a mountainous landscape but also a poorly developed transportation infrastructure. A relatively small population living dispersedly over large areas and restriction of trade between provinces until the mid-1980s have made broadly defined transportation extremely high.3 Small urban areas could not sufficiently function as consumption centers even for agricultural products in nearby provinces. As a consequence, major cities bordering Thailand to the west, where the majority of Lao live, continue to depend more on agricultural products imported from more “industrialized Thailand” instead of subsistent agricultural neighborhoods.