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.
The UN categorisations for development of nations in the world is based on the three different levels- HAI, EVI and GNI- measured to give rise to three distinct categories, least developed, developing and high income or developed countries. Without a doubt, Nepal lands in the first category. But considerable progress has been made. Nepal recorded a marginal rise above the threshold on the HAI Index with 68.7 points while the EVI Index was within the threshold limit with 28.7 points. Nepal, however, recorded a low performance on its GNI per capita Index with $865 in the FY 2016/17. Despite the remarkable improvement in two major indices, the GoN stated that the country isn’t prepared for graduation.
All of this begs to a question as to why the Nepal government was reluctant to graduate to the league of developing countries in the first place? Continue reading
The concept of Special Economic Zone (SEZ) has become ubiquitous as an infrastructural facility. These SEZs provide a combination of tax and tariff incentives, streamlined custom procedures, and less regulation by offering an investment climate that attracts both foreign and domestic investors to invest and establish industrial and business units. With an aspiration to promote and diversify the export market, the GoN, in 2016, had introduced the SEZ Act which evoked immense interest among the investors’ community in Nepal. But it seems that the much-hyped SEZ is losing its appeal among the domestic investors. Continue reading