Laos was occupied during the fourth and fifth centuries AD by Chinese people from the north. It was subject to strong Indian influence from the eighth century onwards and adopted Buddhism. For 200 years from the early 11th century, Laos was part of the Khmer Angkor Empire. It was during this period that the Lao people, who originated in Thailand, invaded the area and displaced the previously dominant Chinese. However, there is some evidence that the Mongol empire had some influence over events in the region in the late 13th and early 14th centuries, probably in alliance with the Angkor kingdom. 
Following the collapse of the Khmer empire, the independent kingdom of Lan Xang, which dates back to 1349, was established as a single entity bounded by Siam (Thailand), China to the north, Vietnam and the Mekong river, occupying roughly the same territory as modern-day Laos.

Populated by a mixture of ethnic Laos, Thais and various hill tribes, the Lan Xang empire lasted for three centuries while fighting off successive invasions from Vietnam, Siam (Thailand) and Burma. Internal power struggles in the 18th century were exploited by its neighbors, notably Siam which finally conquered Vientiane in 1779. The city was later destroyed by the Siamese and the remains of Lan Xang absorbed into Siam. The 19th century was a period of political turmoil in which rival powers with shifting alliances fought for control of the territory. The Siamese were the dominant power until the arrival of the French, who had already established a firm grip in neighboring Vietnam, in the 1870s. Laos then became part of French Indo-China, which lasted until the 1950s, with the exception of a brief period of Japanese occupation during World War II.

Full independence was achieved in 1953 under the rule of King Sisavang Vong. The monarchy was opposed by former nationalist guerrillas organized into the Laotian Patriotic Front (LPF) whose fighters, the Pathet Lao, formed an alliance with the Viet Minh (later Viet Cong) nationalists in neighboring Vietnam to expel the residual French, and later to counter US influence in the region and the regimes supported by them. Despite repeated efforts, both before and after the communist takeover in 1975, the Chinese failed to exert any significant influence over the country. Indeed, after 1975, Laos became dependent on military and economic assistance from Vietnam, China’s enemy. In the late 1980s, however, tension between China and Laos at last began to ease: diplomatic relations (which had been severed in the late 1970s) were restored in December 1987, and cultural and bilateral trade agreements signed.

A steady improvement has been maintained since then. Relations with Thailand and with the West have followed a similar pattern. Since 1988, there has been greatly expanded commercial contact between Thailand and Laos and the political relationship has improved. The dominant political figures in Laos since independence have been the veteran General Secretary of the Lao People’s Revolutionary Party (the LPRP, whose armed wing is the Pathet Lao), Kaysone Phomvihane, and Prince Souphanouvong (the ‘Red Prince’). The activities of the country’s main opposition movements, the right-wing pro-royalist United Lao National Liberation Front and the United Front for the National Liberation of the Lao People, have been confined to minor armed rebellions from bases among the northern hill tribes (the cause of a series of minor bomb attacks in Vientiane during 2000 has yet to be discovered).

Souphanouvong retired from all his posts in March 1991, heralding a period of major political and economic reform. A new constitution was adopted in August 1991, under which elections for a new National Assembly took place in December 1992. A period of economic reform began as Laos sought to emulate the changes effected by its larger neighbors. The country’s relative isolation and lack of resources has made this difficult. Several regional economic co-operation agreements have been reached with Thailand, Cambodia and Vietnam, and Laos has been admitted to the Association of South East Asian Nations, the former anti-communist regional bloc which has since reinvented itself as an economic organization. In 1995, the Americans relaxed their aid embargo which dated back to the 1975 revolution. These developments were unfortunately offset by the 1997 Asian financial crisis which brought about a collapse in the value of the kip.

But Laos has seen little political evolution and the LPRP retains tight control. In 1998, changes in the upper echelons of the regime promoted Khamtay Siphandone, one of the few remaining veterans of the original Pathet Lao leadership, to the position of president and head of the LPRP politburo in place of the retiring Phoumsavanh. Elections to the National Assembly were held in February 2002: all candidates belonged to the LPRP, bar one (who was, nonetheless, government-approved). This did nothing to help the government’s major internal problem: the growing insurgency by the Hmong people, a neglected ethnic minority located in the north of the country. A steady stream of violent attacks have been launched by the Hmong during past years.

Government
Laos has a 166-member legislature, the Sapha Heng Xat (National Assembly), members of which are elected for five-year terms and must (with a single exception) belong to the ruling Lao People’s Revolutionary Party. The assembly elects an executive president, also for a five-year term. The president appoints a prime minister and council of ministers.

Economy
Laos is one of the world’s poorest countries, and its predominantly agricultural economy operates almost entirely at subsistence level. Rice, the main crop, is grown in several different varieties; other crops include maize, cassava, pulses, groundnuts, fruits, sugar cane, tobacco and coffee. Though little known outside the region, Laotian coffee is highly rated among connoisseurs and is now the country’s single largest export commodity. The country has considerable, though largely untapped, reserves of tin, lead and zinc, as well as iron ore, coal and timber. Industry is mostly concerned with processing raw materials, principally timber and food; textiles and basic consumer goods are also produced. Despite its relative obscurity and secretive nature, a tourism industry has developed which is now Laos’ single largest source of income. Development is hampered by chronic shortages of skilled labor and foreign exchange, and the Laotian economy relies heavily on foreign aid (80 per cent of public sector investment is financed by aid) from Japan and Scandinavia, and more recently Thailand, Taiwan and Australia.

Economic reforms began in the early 1990s and included an extensive program of privatization. These initially attracted the support of the IMF but the government’s failure to meet successive financial targets led to a withdrawal of the Fund’s support in 1998. Compounded by the regional financial crisis, the economy was in serious difficulties by the beginning of 1999 with 100 per cent annual inflation, a collapsed currency value and a desperate shortage of foreign and domestic currency. Since then, something of a recovery has taken place: the economy is now growing at around 6 per cent annually while inflation has been cut to a more manageable 25 per cent. Nonetheless, the country’s economic prospects are uncertain. Laos is a member of the Asian Development Bank and the Colombo Plan, which promotes economic and social development in Asia and the Pacific.