The Impact of the Hongsa Lignite Power Plant on the Lao Economy : Input-Output Approach

Abstract

The focus of this study was to analyze the impact of the investment in the Hongsa Lignite Power Plant on the Lao economy in 2015 using an input-output approach and data from the investment project (including data from a factory pre-feasibility study), as well as data from the sectors involved. The study concludes that the impact of the investment, which was worth 4,288 billion kip, in the Hongsa Lignite Power Plant on the electricity, construction and transport sectors, as well as on other services, has increased the Lao economy’s total output by 6.7% for a value-added amount of 7,245 billion kip. This study also finds that the main sectors impacted by the economy’s output and backward linkages are the sectors of wood and paper, transport equipment, textiles and apparel, and food and beverages. The study concludes that the Hongsa Lignite Power Plants has contributed to the Lao economy. More generally, it shows that an input- output table could be a useful tool for finding the main sectors involved in the generation of an economy’s output. The table is also a tool used to set priorities for the effective planning and achieving of economic growth and investment goals.