Title: The socio-economic impacts of Lao-Thai informal border trade on people's livelihood and poverty reduction
Author: Viengxay Thammavong
Year: 2008
Keywords: N/A
Theme: Human Development and Human Security
Advisor(s): Puangthong Pawakapan, Advisor
The full thesis available here.
Abstract: The purpose of this study is to examine the networks of informal cross-border trade and its relationship to formal trade, as well as the impact of informal trade on the livelihoods of those involved. The study shows that almost all informal cross-border traders are women aged 25-45 with limited education. All informal cross-border trade is small-scale, primarily trading consumer goods and household appliances. The research also indicates that the income from informal cross-border trade is significantly higher than their previous incomes. Therefore, informal cross-border trade is a genuine source of income for those involved, and it can even become their primary occupation, resulting in improved living conditions. The study demonstrates that cross-border traders overcome business obstacles by leveraging their social networks and business expertise. They operate as a social community comprising cross-border traders, porters, etc. This integration of social networks benefits the cross-border traders by reducing competition, building trust, and enhancing their capabilities. At the same time, they use these social networks to protect themselves from exploitation. The study further highlights the businesses of these cross-border traders. Cross-border trade involves elements of both formal and informal trade. Specifically, border traders own legally registered shops, have obtained licenses from relevant government agencies, and pay taxes. Meanwhile, the goods sold in these shops are purchased both formally and informally to reduce costs and maximize profits. Therefore, formal and informal trade inherently overlap in some aspects. This study focuses on studying the characteristics of informal border trade networks and its relation to formal channel, and the impacts of informal trade on people's livelihoods involving in the informal trade. The finding determined that almost of the informal border traders are women, aged between 25 to 45 years old, with low level of education. Most of the informal border trade was on a small scale and the products traded are mostly consumption and household goods. The research also indicated that the income earning from informal border trade of the traders is much higher than those from their previous jobs. Therefore, the informal border trade is a real source of income for people who involve in the business and it can be considered as their main job. As the result, their living condition has been improved better. The finding of the research showed that the border traders are able to overcome the barriers in their business operations by calling on a number of social network and business skills. They work in a social community which included other border traders, porters and other parties. The combination of these social linkages gives border traders advantages in minimizing hassles, building trust and increasing the scope of their capabilities. At the same time, they use these social networks to guard against another party taking advantage of them. The research also found that the businesses of these cross border traders are themselves combine a formal and informal characteristic. On the shop itself, a shop owner has to apply for a license from authority concerned and pay taxes to customs while goods suppliers in a shop buy from both formal and informal channel in order to reduce their capital and gain maximize profit. Therefore, formal and informal trades are overlapping in this border trade area.