Fukase and Martin (1999) built a simple CGE model to analyze the economic effect of joining the AFTA; their simulation results showed that AFTA accession was economically beneficial. Using the CGE modeling, Warr and Menon (2006) studied the effect of rural road improvements on poverty incidence in Laos. Their simulation results showed that there was considerable scope for reducing poverty incidence in Laos by reducing rural transport costs through improving the quality of rural roads. Warr (2006) built a two-sector, multi-household CGE model to analyze the impact of the hydropower dam Nam Theun 2 (NT2). His simulation results showed that the project had significant effects on poverty incidence, but if poor household did not share directly in the proceeds of the project, poverty incidence was likely to rise. Stone et al. (2009) used a GTAP model to investigate the impact of transport infrastructure projects on socio-economic characteristics in the Greater Mekong Subregion.
4 After establishing the Lao People’s Democratic Republic in 1975, the Lao government adopted a planned economy, following other socialist countries.