rate of per capita GDP in this 4 years period was 8.5 percent, 3.6 percent, 1.6 percent, 4.1 percent respectively (see Table 2-III-3).

In the agricultural sector, the growth rate was negative: -1.2 percent, -4.2 percent in 1987 and 88 respectively because of drought, and -1.7 percent in 1991 (see Table 2-III-4). These unstable rates reflect Laos's agriculture characteristics that depend on rain water, and have poor irrigation. The agriculture share of GDP in 1993 was 60.0 percent, the industry rate was 17.5 percent, and the services rate was 22.5 percent. The agriculture sector account for just 60 percent of GDP (see Appendix 2). Owing to these conditions, the weather determines the whole country's economy and makes the economy fragile. The rice yield in 1992 reached 150 million tons, seemingly quite large compared to 1991's 122 million tons. But rice yield could not reach the goal of 160 million tons in 1992. (1) New changes in plain field agriculture have appeared since the reform in 1986, including expansion of area under cultivation of dry season rice by improvement of irrigation, (2) appearance of farmers that adopt method of modern rice cultivation such as seed selection and utilization of chemical fertilizer and agricultural chemicals, (3) increase of manufacturing crops and commercial crops, etc. $ ^{20} $

As for the industrial sector, the growth rates in 1987 and 88 were negative, -16.0 percent and -2.4 percent respectively. From 1989 to 93 positive growth was seen: 35.0 percent, 16.2 percent, 19.9 percent, 7.3 percent, 11.0 percent respectively (see Table 2-III-6). Drought also decreased industrial production in 1987 and 88 because electricity generation volume decreased, followed by stagnant overall economic activity. After 1989, economic growth began to recover because of foreign investments in the construction sector and clothing industry, but the growth rate from 1992 was 7.5 percent, 11.0 percent, lower than the 9.9 percent rate of 1991.

In the service sector, growth rates in the period from 1987 to 92 were volatile: 8.0 percent, 4.1 percent, 4.5 percent, -4.2 percent, 8.0 percent, 4.3 percent, 9.2 percent, respectively for each year. The growth rate in 1993, 9.2 percent, was higher than 1992's 4.3 percent. (see Table 2-III-6).

## (2) Inflation Control

The inflation rate was 75.9 percent in 1989, 19.6 percent in 1990, 10.4 percent in 1991 and 6.0 percent in 1992 (IMF statistics), and 6 percent in 1993. $ ^{21} $ Inflation was controlled because of currency control: the central bank stopped financing for profit-losing state enterprises, set interest rates higher than inflation rates and stopped printing money to finance the budget deficit. $ ^{22} $

## (3) Budget of the Central Government

Current expenditures were 14.8 billion kips in 1986, and 67,839 million kips in 1990. The average annual growth rate was 46 percent during this term. Capital expenditures were 11.7 billion kips in 1986, and 66,080 million kips in 1990. The average growth rate was 54 percent during this term. By individual expenditure items, wages showed remarkable growth among current expenditures, increasing from 4,760 million kips in 1986 to 35,439 million kips in 1990, with 65 percent annual average growth. Among capital expenditures, transportation and telecommunication were given high priority, increasing from 4,491 million kips in 1986 to 29,126 million kips in 1990 with 60 percent annual average growth. This trend was consistent with the goal of The Third Five Year Plan (see Table 2-III-7).