The Lao government has actively promoted foreign direct investment (FDI) in order to overcome limited human resources, poor infrastructure and low productivity since 1988. This thesis aims to investigate the background and development of FDI inflows in Lao PDR. The research has discussed FDI cumulative stocks from 1988 to 2019, the sectoral analysis by analzing the major sectors which are most attractive for foreign investors, understanding the relationship of FDI to Lao economic growth and FDI national position compared to bordered countries.