Abstract The Lao People's Democratic Republic (Lao PDR) opened its doors to international tourists in 1989 and, since then, the tourism industry has developed rapidly to become one of the country’s largest earners of foreign currency. The Lao PDR possesses a beautiful, virtually untouched natural environment and a population that still practices their rich traditional culture these two characteristics form the basis for the promotion of tourism development in the Lao PDR. In addition Tourism was prioritized as an important sector in Lao PDR’s Socio-Economic Development Plan and in the National Growth and Poverty Eradication Strategy, tourism is identified as a priority sector in contributing to poverty eradication by enacting a strategy focused on pro-poor initiatives, Community-Based Tourism development, the enhancement of specific tourism related infrastructure, and increasing sub-regional tourism cooperation. 1. Introduction Laos is blessed with rich natural and cultural resources which afford us a competitive advantage in tourism over our neighbors. Foreign tourists come to our country seeking untouched natural beauty and an authentic cultural experience. Because of our country’s magnificent landscape and unique culture, ecotourism in Laos has become world-renowned. Tourism has become a major source of foreign income, generated numerous employment opportunities, and will create spillover effects in other sectors such as education or healthcare. It has changed and will continue to change the lives of countless Laotian citizens. Tourism has grown rapidly after the Lao government introduced tourism promotion policy in late 1990s. The number of tourist arrivals has increased constantly with an annual average growth rate of 14 percent. The tourism receipts have also increased in accordance with increased number of tourist arrivals. This makes tourism rank second as a source of foreign currency revenue, after mineral export. Tourism is a sector that can be developed and can become a source of growth for Laos. I believe this industry can be further developed for less cost and added benefit than other sectors such as education or healthcare since a rudimentary infrastructure already exists. Also, the developments made in this industry will have spillover effects for other areas of society. Thus, there will be both direct and indirect benefits from tourism. Direct benefits include increasing employment opportunities and revenues for local businesses. Indirect effects will occur in other sectors such as education and healthcare because tourists will demand educated staff on tours and in hotels and access to safe drinking water, food, etc. Additionally, revenues generated from tourism will have a multiplier effect on this industry and the country as a whole since citizens and the government will be able to use the generated revenues to increase consumption and improve standards of living. Eventually the revenues from the tourism industry will be shared among the many different sub-sectors of the industry such as lodging, restaurants, transport, and micro-businesses which focus on selling souvenirs. Aside from generating government revenue, income for citizens, employment, and various spillover effects, tourism will help Laos to earn revenues in foreign currency. This inflow of capital will increase the foreign reserves of the country, allow for future repayment of foreign debts, and could additionally be used to purchase foreign goods. Other non-economic benefits can be achieved by increasing the reach of the tourism industry. These include increased capacity building through the training of locals in tourism services, opportunities for Laotians to come in contact with other cultures, and improved access to services and infrastructure. Keywords: Tourism development, Social-Economic impact, Tourism’s contribution. 2. Geographic Setting Lao people’s Democratic Republic is situated in the center of Southeast Asia, with a land area of 236, 800 square kilometer (km), bordering with Vietnam 1,957 km in the eastern, with Thailand 1,730 km in the western, with Cambodia 492 km in the southern, and with China 416 km and 230 km with Myanmar in the northern. The climate of the Lao PDR is tropical with two distinct seasons: the rainy season from the beginning of May to the end of September and the dry season from October through April. The high tourist season coincides with the dry season of October to April. Although Laos has no direct access to the sea, it has numerous rivers including a 1,965 km portion of the Mekong River, which defines its border with Myanmar and a major part of the border with Thailand, and drains most of the country. The Mekong and its tributaries including several scenic waterfalls comprise one of the important attractions for tourist as well as being important transportation routes. Laos also has a bundle of mountain covering about 70 per cent of land. About 47 per cent of the entire