How one becomes an ‘entrepreneur’ in a transition economy: the case of manufacturers in Laos

With the exhaustive life histories of 24 manufacturers, I explore whether and, if at all, how inward foreign direct investment (FDI) and imports inspire individuals to become entrepreneurs in Laos: a small transition economy. The data is constructed from the interviews conducted in 2005: about 20 years after the official initiation of market-oriented economic reforms in Laos. The life histories of my respondents, the first-generation local entrepreneurs, are generally in line with the classical argument made by Albert O. Hirschman: FDI and imports have positive impact on the rise of local firms by revealing potential markets to would-be local entrepreneurs. Not through providing access to specific technology, but through revealing new business opportunities and reducing demand uncertainties in these businesses, inward FDI and imports often prompted my respondents into modern manufacturing business. In contrast, the respondents with no foreign involvements tend to choose relatively traditional products, such as furniture and wood products, as their main line of business.