Road Development and Poverty Reduction: The Case of Lao PDR

Abstract

Most poor people of the world reside in rural areas, which are frequently characterized by low levels of public infrastructure, especially roads. Inadequate roads raise transport costs, limiting the use poor people can make of local markets for the sale of their produce, the purchase of consumer goods and opportunities for off-farm employment. Access to educational and health facilities, where they exist, is also constrained when it is difficult to reach them. In tropical areas, unsealed roads may actually be impassable during the extended rainy periods of the year. These problems are particularly acute in Lao PDR, where inadequate roads are a severe problem for rural people. But significant road improvement is generally not a form of investment that rural people can make by themselves. Public sector involvement is required. Action to improve rural roads therefore seems a clear means by which large numbers of people might acquire the opportunity to participate in the market economy and thereby raise themselves out of poverty. But does it actually work?