The Mekong river forms Laos's main thoroughfare and feeds the fertile lowlands of the Mekong valley. Independence from France in 1953 was followed by two decades of civil war, and heavy bombing by US forces during the Vietnam War. The communist Lao People's Revolutionary Party (LPRP) has held power since 1975. The government began to introduce market-oriented reforms in 1986. A transfer of power to a younger generation within the LPRP took place during the 1990s.

There are more than 60 ethnic groups in Laos and this considerable diversity has hindered national integration. Society is broadly divided by altitude rather than by region. The lowland Laotians make up some 60% of the population. The upland Laotians, who live in the hills above the valleys, account for 30%. The small minority of mountain-top Laotians, who include the Hmong, Yao, and Man groups, have resisted government efforts to introduce substitutes for traditional cash crops such as opium. The government continues to face small pockets of Hmong resistance.

Two-thirds of the population speak Lao, and a large number of tribal dialects are also spoken.

Strengths

Rising levels of overseas (mostly Thai) investment. Potential of garment manufacturing, timber plantations, mining, wood processing, tourism, banking, and aviation. Minerals and possible oil and gas deposits.

Weaknesses

One of the world's least developed countries. Lack of technical expertise. Imbalance in sources of foreign investment – most is Thai. Problems in targeting aid efficiently.

Laos has been ruled by the same circle of communist revolutionaries, one of the world's most durable and closely knit hierarchies, since 1975. The military, the LPRP, and the executive branch remain closely intertwined, with party chairman Gen. Khamtay Siphandone becoming the country's president in February 1998. Despite limited moves toward political reform, the LPRP, which is modeled on the Communist Party of Vietnam, continues to dominate political life at every level.

The long-standing problem of corruption, sometimes at high levels, has become a matter of concern as Laos has opened to foreign investors. Economic reform has not been accompanied by political liberalization.

Vietnam was Laos's most important ally from 1975 until the late 1980s, when the LPRP began to seek improved relations with Thailand and the West. The motivation was mainly the need for foreign aid. In 1992, Laos acceded to the Treaty of Amity and Concord of ASEAN, marking the beginning of a new relationship with former adversaries. Laos was admitted to full membership of ASEAN in 1997.

The armed forces are estimated by the West to number around 30,000 personnel. This total is further swelled by a paramilitary militia. Eighteen months' military service is compulsory for all Laotian men.

Laos's most important agricultural resources are timber and coffee. The country is also rich in minerals.

Bombing and the use of defoliants in the Vietnam War did serious ecological damage. Slash and burn farming and illegal logging are destroying forests.

A major new Thailand–Vietnam road is planned via Savannakhét. Freight goes mainly by river; there is no railroad and roads are poor and few.

Since 1975, public health care has developed steadily. Malaria and hemorrhagic fever are on the increase.

Adult education is currently being expanded. Since 1990, private schools have been allowed to help meet demand.

Laos is the world's third-largest opium producer. The USA has provided funds to replace poppies with alternative cash crops.

There are large inequalities of wealth throughout Laos. A rapidly expanding group of Laotian entrepreneurs is profiting from the gradual liberalization of the country's economy, while many in the highlands and mountainous regions lead a subsistence existence.

Tourists were first allowed into Laos in 1989; numbers have risen rapidly since then. Mass tourism is discouraged and preference given to small package tours. Hotels are few, and travel outside Vientiane is difficult.

In the late 19th century, France established control over the three small kingdoms of Champasak, Louangphrabang, and Vientiane.

• 1899 Laos unified under French.
• 1953 Independence as a constitutional monarchy.
• 1963 Left-wing armed struggle begins, overshadowed by Vietnam War.
• 1973 Insurgents and royal government form coalition after withdrawal of US forces.
• 1975 LPRP seizes power, advocating "socialist transformation."
• 1978 Popular unrest and resistance to collectivization. Almost 50,000 Laotians flee to Thailand.
• 1986 Fourth Party Congress introduces market-oriented reforms.
• 1990 Counteroffensives against right-wing, largely Hmong, guerrilla bases.
• 1991 Constitution provides for a National Assembly, confirms the leading role of the LPRP, and enshrines right of private ownership.
• 1992 Prime Minister Khamtay Siphandone becomes LPRP leader.
• 1997 Laos joins ASEAN.
• 1998 Khamtay becomes president.
• 1999 Student-led demonstration in Vientiane demanding greater political freedom.
• 2001 Prime Minister Sisavat Keobounphan resigns over economic mismanagement.