This paper shows how a developing country, Lao PDR, imports high glutinous rice
prices by exporting its staple food to neighboring countries, Vietnam and Thailand.
Lao PDR has extensive export controls on rice, generating a sizable difference
between domestic and international prices. Controls are relaxed after good harvests,
leading to a surge in exports early in the season and rapidly rising prices later in the
year. There is thus a strong case for removal of trade restrictions since they give rise
to price spikes, keep the long-term price of glutinous rice low, and thereby hinder
increases in income from agriculture. Although this is a case study of Lao PDR, the
findings may equally apply to other developing countries that export their staple
food.