Lack of access to good road networks is a major constraint on the incomes and welfare of the poor. Quantifying the precise impact of this constraint is challenging. Using recently available household expenditure survey data for Lao PDR this paper models the causes of poverty there and shows the impact on overall poverty levels of road improvements. As expected the impact is substantial: over 30% of rural households have no satisfactory road access. The paper is of interest not just for discussions on Lao PDR, but also for its methodology which can be applied elsewhere.
Although only a few developing countries have succeeded in sustaining rapid growth for a long period and in reducing poverty significantly, the evidence does suggest an association between episodes of rapid growth and poverty reduction. There is no robust association between income inequality and aggregate growth. Some policies and factors do seem to promote growth and reduction in poverty: openness to international trade and capital, conditions conducive to the creation of a disciplined and adequately educated and healthy labor force, macroeconomic stability and an environment of 'low' transaction costs.