The traditional Lao economy was based on agriculture, handicraft production, and trade. Indeed, for centuries before Europeans arrived, flourishing local and long-distance trade networks had linked Southeast Asia with East and South Asia. It was the prospect of controlling the lucrative Asian trade in spices and other luxury goods that initially lured the French and other Europeans to Southeast Asia in the 17th and 18th centuries. Later they also hoped to exploit the region’s natural resources. However, French efforts to develop Laos economically in the late 19th and early 20th centuries came to little, as they quickly concluded that Laos’s terrain made commercial agriculture and mining difficult.
Laos has a number of mineral resources, including coal, iron, copper, lead, gold, tin, gypsum, and precious stones. Tin has been mined commercially since colonial times, and gypsum has become important; the other minerals have been worked only in primitive and unsystematic ways.
Laos has considerable hydroelectric power potential. Electricity produced from a dam on the Ngum River north of Vientiane and sold to Thailand is one of the country's most valuable exports.
Government-industry cooperation, a strong work ethic, mastery of high technology, and a comparatively small defense allocation (1% of GDP) have helped Japan advance with extraordinary rapidity to the rank of second most technologically powerful economy in the world after the US and third largest economy in the world after the US and China. One notable characteristic of the economy is the working together of manufacturers, suppliers, and distributors in closely-knit groups called keiretsu. A second basic feature has been the guarantee of lifetime employment for a substantial portion of the urban labor force. Both features are now eroding. Industry, the most important sector of the economy, is heavily dependent on imported raw materials and fuels. The much smaller agricultural sector is highly subsidized and protected, with crop yields among the highest in the world. Usually self-sufficient in rice, Japan must import about 50% of its requirements of other grain and fodder crops. Japan maintains one of the world's largest fishing fleets and accounts for nearly 15% of the global catch. For three decades overall real economic growth had been spectacular: a 10% average in the 1960s, a 5% average in the 1970s, and a 4% average in the 1980s. Growth slowed markedly in the 1990s largely because of the aftereffects of overinvestment during the late 1980s and contractionary domestic policies intended to wring speculative excesses from the stock and real estate markets. Government efforts to revive economic growth have met little success and were further hampered in late 2000 by the slowing of the US and Asian economies. The crowding of habitable land area and the aging of the population are two major long-run problems. Robotics constitutes a key long-term economic strength, with Japan possessing 410,000 of the world's 720,000 "working robots".
