• Reducing the Cost of Doing Business to Boost Private Investment and Economic Growth

    Many economists of the 20th century spent their life working on theories of economic growth. They have explained their growth models in varying ways and from different angles. The technicalities in these theories might vary but if we carefully examine, we can find a common aspect in all of them. They agree to each other on the fact that higher level of economic growth cannot be attained without high level of investment. The growth in the level of investment increases the level of income and employment, directing the country towards the path of economic prosperity.

    These theories, on the basis of empirical evidences have also emphasized on promotion of private sector investment to bring about positive change in income of the country. Following these economists, we can assume that for Nepal to achieve high level of economic growth, facilitation of private investments and private businesses is of utmost importance. To bring about new investments, it should be easier for new businesses and industries to enter the market. Easy entry process reduces the overall cost of starting the business, thus, encouraging new businesses and investments in the economy.

     

    But, if we look at World Bank’s Doing Business indicator, Nepal’s position is not very satisfactory. According to World’s Bank report, Nepal ranks 105 out of 109 countries in ease of doing business. An aspiring entrepreneur has to spend 16.5 days and has to go through 7 procedures to register a business. Moreover, it costs 24.9 percent of the per capital income to start a business. These statistics depict that it is not an easy process for new businesses to enter the market, which has impede the new investment in the economy, causing negative impact on growth of income and employment.

    In addition to this, paying taxes is also not an easy task. Filing and paying taxes requires a whopping 339 hours and costs 29.6 percent of the profit. Huge cost and time incurred in paying taxes have directly discouraged entrepreneurs to initiate new business ventures.

    The inference that we can derive from the growth theories and our position on ease of doing business is that if we are to accelerate the pace of economic growth, starting businesses and paying taxes should be made easier and less costly. In order to achieve high level of economic growth, we will have to attract new investment and businesses which can only be done if overall cost of doing business is significantly reduced.

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  • Poor too Can Become Reliable Investors

    If an economy has high savings rate, the stock money is normally used as investments in the productive sectors. In case of Nepal, looking at the past trends, the gross domestic savings as percentage of GDP has changed a lot. In recent years, the trend has been moving in a downward direction. As per the available data, in 2016, Nepal’s gross domestic savings as percentage of GDP stood at 3.82 percent. As the country adopts federalism and works to make different parts of Nepal as economically competent as possible with the use of a highly decentralized development model, it is necessary now more than ever to have Nepalis saving more to generate substantial funds necessary to invest in local and regional small, medium and large scale infrastructure development works and other related works that drive local and national economic growth. Continue reading

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  • The fundamental flaw in project planning – The Planning Fallacy

    Why do projects rarely get done on time? How come that paper you set 3 hours aside for more often than not take you 8? Why are mega-infrastructure projects almost always over budget and still nowhere near complete on projected completion dates? Picture Melamchi, a project envisioned in the late 90s and scheduled to be completed by 2007. 11 years later in 2018, we are still facing the inconveniences of dug up roads for pipelines, the benefits yet to be reaped. Continue reading

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  • Psychographics Analysis in Policy-Making

    By now, you must be aware of the fact that Cambridge Analytica, a London-based consulting firm, had harvested data of about 87 million Facebook users to influence latters’ political, business and consumption priorities in countries around the world. Of many ways the data thus collected was processed and used, it’s use in Brexit and also during 2016 US Presidential Election has garnered crucial attention at the moment. The revelations so far indicate that Cambridge Analytica had used the data in building psychographic profile of every British and US voter so as to influence their voting patterns.

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  • Key to Reforming Indian Education: Rescuing Government Policy-making and Regulatory Functions from Service Delivery

    Vikas Jhunjhunwala explores pertinent ways to address the sidelined policy making and regulation in the Indian Education Sector in this article published originally in Center for Civil Society’s, Spontaneous Order.

    Currently the governmental roles of policy making, regulation and service delivery are combined within a single entity in the Indian Education Sector. There is a need, however, for these to be separated into 3 different entities with an “arms- length” relationship between them (similar to sectors such as finance, telecom and electricity). Doing so would free up valuable bandwidth for policy making and regulation which is currently being impeded by service delivery. In turn, this would enable an in- depth understanding of the issues faced by private sector entities, leading to the healthy development of the sector as a whole. Continue reading

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  • ECONOMIC TIMELINE OF NEPAL

    Economic development in Nepal has been challenging, since time immemorial, due to the frequent changes in the political leadership. The political isolation of the early Nepali kingdom fostered an economic system of rent seeking elites and resulted in increased income inequality. The subsequent economic liberalization, with the end of absolute monarchy, led to economic growth and improvement in living standards of the people. As a Federal Democratic Republic, Nepal embarks on a new journey where it can hopefully, progress towards sustainable economic growth.

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