Collective Campaign for Peace (COCAP) Nepal recently conducted its third annual conference at Hotel Orchid from 19 to 20 September, 2014. Samriddhi, The Prosperity Foundation hosted two of its sessions related to economic agendas. One was about the macroeconomic policy direction for future Nepal and another one was about the foreign direct investment scenario of Nepal. For the former topic, I presented a paper on behalf of Samriddhi. Rameshore Khanal, former finance secretary and economic adviser to the then Prime Minister Baburam Bhattarai commented on my paper whereas Deependra Bahadur Kshetri, former vice-chair of National Planning Commission chaired the session. Below is the paper I presented during the conference. My primary hypothesis is that liberalization process has not yet been completed in Nepal and it has been directed towards poorest of the poor which is one of the reasons for its failure to deliver economic growth in Nepal. Please let me know your views and opinions in the comments below.
These days everything is getting smart. Beginning from our phones we are in an endless quest to smarten up every gadget we have been using in our daily lives. The quest has resulted in revolutionizing majority of the industries of the world by changing the way people interact with each other as well as the machineries. Unfortunately the same cannot be said of a few institutions and industry, most notably of the global aid industry. The global aid industry has been spewing billions of dollars for endless list of causes around the world. And yet, the effectiveness of aid in helping developing countries stand on their own has been debated again and again. Among the myriads of issues faced by developing countries what are the most important issues, which issues should be the priority for the development aid agencies? This is one question that has never been properly answered. Which issue gets the largest share of aid money at any point of time, seems to be determined by the hype and glamour the issue is commanding at the time.
In this context, Matt Ridley has come up with these five priorities for the development aid to focus on if they really want to make an impact to the developing countries. These five priorities are not based on his personal preference though. It makes economic sense to invest in these priorities as they have been found out to bring the highest return on per dollar spent on the cause. The priorities were determined based on the extensive cost benefit analysis done by The Copenhagen Consensus Center, an internationally reputed think tank.
According to Ridley, following are the issues rich countries should be spending aid money on if they really wanted to help poor countries:
1. Reduce malnutrition. When children get better food, they develop their brains, stay in school longer and end up becoming far more productive members of society. Every dollar spent to alleviate malnutrition brings $59 of benefits.
2. Tackle malaria and tuberculosis. These two diseases debilitate huge populations in poor countries, but they are largely preventable and curable. In the most harshly affected countries, two people often do one person’s work because one of them is sick. Benefit to cost ratio: 35 to 1.
3. Boost preprimary education, which costs little and has lifelong benefits by getting children started on learning. 30 to 1.
4. Provide universal access to sexual and reproductive health, which would save the lives of mothers and infants while enabling women to be more economically productive. It would also lower birthrates (when fewer children die, people have fewer children). Benefits could be as high as 150.
5. Expand free trade. This isn’t considered sexy in the development industry, and it may seem remote from humanitarian issues, but free trade often delivers phenomenal improvements to the welfare of the poor in surprisingly quick time, as the example of China has demonstrated in recent years. One of the discoveries of the Copenhagen Consensus process is that incremental goals such as expanding free trade are often better than supposedly “transformational” goals. A successful Doha Round of the World Trade Organization could deliver annual benefits of $3 trillion for the developing world by 2020, rising to $100 trillion by the end of the century.
You can read Ridely’s complete article at this link.
What do you think of these five priorities? One of the popular causes, climate change has not made it to the list. What is your opinion on it?
This year’s School Leaving Certificate (S.L.C) exam results came out disappointing too. Poor S.L.C results have ceased to surprise us anymore. This time too there is huge difference between the performance of private schools and public schools run by the government. 93 percent of the students of private schools have passed the exams whereas only 28 percent of the students from public schools have made it through. What are the reasons behind this. The following infographic lists out some of the reasons:
You can read my article analyzing these reasons in detail here.
अहिले नेपाली समाज पुँजीवादी भैसकेको कि नभैसकेको भन्ने बहसले ठुलै चर्चा पाइराखेको छ | नेपालको एउटा ठूलो विडम्बना नै के हो भने यहाँ सबै वादको “आधिकारिक” परिभाषा चै वामपन्थी विद्वानहरुबाट आऊछ र उनीहरुले दिएको परिभाषा सर्वसम्मतले मान्नु पर्ने बाध्यता छ | चाहे त्यो नेपाली कांग्रेसको समाजवाद होस् या एमालेको बहुदलीय जनवाद या माओवादीको माओवाद स्वरुपी साम्यवाद, नेपालका सबै राजनीतिक दलहरुको अभिमुखीकरण समाजवादको सेरोफेरो भन्दा बाहिर जान सकेको छैन| त्यसैले नेपालको वाद र शासन व्यवस्था सम्बन्धी बहसमा असली पुँजीवाद के हो , अझ भनौ पुँजीवाद आफैंमा कुनै वाद हो कि होईन भन्ने प्रश्न अन्त्यन्त गौण हुन पुगेको छ | यसैगरी कुनै शासन व्यवस्थाका व्यवहारिक पक्ष भन्दा पनि आलंकारिक बहसमा नै राजनीतिक दलहरु अल्झनु अर्को दु:खको कुरा हो, नेपालका लागि |
सन् १९७८ पश्चात चीनले केन्द्रीय योजनामा आधारित माओवाद त्यागेर पुँजीवाद अँगाल्नु, भियतनामले दोई मोई कार्यक्रम मार्फत देशमा बजार अर्थतन्त्र भित्र्याउनु र सन् १९९० मा सोभियत संघ विघटन हुनुले सारा संसारलाई साम्यवाद वा केन्द्रिकृत समाजवाद कुनै हालतमा काम गर्दैन र यस शासन व्यवस्थालाई अंगाल्न खोज्नु मुर्खता मात्र हो भन्ने चेतना भयो | फलस्वरुप पुँजीवादी अर्थ व्यवस्था, अझ वास्तवमा भन्नु पर्दा खुला बजार अर्थतन्त्र नै श्रेष्ठ अर्थव्यवस्था हो भन्ने ठहरियो | नेपालले पनि १९९० को दशकको पुर्वार्धमा केही उदारीकरणका कदम चाल्यो र अर्थतन्त्र पुँजीवाद तर्फ ढल्कियो | अर्थतन्त्रलाई खुल्ला र प्रतिस्पर्धी बनाउने उद्देश्यका लागि ती कदमहरु सकारात्मक भएता पनि पर्याप्त भने कुनै हालतमा पनि थिएनन् |
यद्यपि वामपन्थी राजनीतिक दल र बुद्धिजीवीहरुका नजरमा भने उक्त कदमहरु पश्चात नेपालमा चरम पुँजीवादी अर्थव्यवस्था आएको र नेपाली जनताले जे जति दु:ख भोगी राखेका छन् ती सबैको कारक १९९० को उदारीकरण र खुला अर्थतन्त्र भएको भन्ने बुझाई छ | नेपाली कांग्रेसका हालका सम्मेलनहरुमा देखिएको बी.पीको समाजवाद प्रतिको उर्लदो मोह देख्दा नेपाली कांग्रेस आफैं पनि आफ्नो नीति प्रति अनिश्चित भएको हो कि भन्ने भान पर्छ | तर के हाम्रा वामपन्थी विद्वानहरुले भने जस्तै हामीले अहिले भोगी रहेको शासन व्यवस्था चरम पुँजीवादी अर्थव्यवस्था हो त ?
यस प्रश्नको आत्मगत उत्तर खोजिने हो भने अवश्य नै भिन्न भिन्न विचार आउनेछन र उक्त अभ्यास हाम्रा वामपन्थी विचारकहरुले पुँजीवादको परिभाषा गरेको भन्दा फरक नहोला | वस्तुगत तरिकाले हेर्ने हो भने पुँजीवादी अर्थव्यवस्थाका लागि आवश्यक तत्वहरु के के हुन् र ती कुराको नेपालमा अवस्था कस्तो छ भन्ने कुरा हेर्नु पर्छ | निजी सम्पतिको कानूनी सुरक्षा, प्रतिस्पर्धा पूर्ण बजार, सिमित सरकार, विधिको शासन जस्ता कुराहरु विना पुँजीवाद सफल हुन सम्भव छैन | यी कुरामा नेपालको अवस्था कस्तो छ त ? यसका लागि आर्थिक स्वतन्त्रतामाथि गरिएका अध्ययनहरुलाई हेर्न सकिन्छ | हेरिटेज फाउन्डेसनले वर्षेनी प्रकाशित गर्दै आएको आर्थिक स्वतन्त्रता प्रतिवेदनलाई हेर्ने हो भने नेपाल अर्थतन्त्र स्वतन्त्रताका आधारमा १५०औ अवस्थामा छ, अर्थात् पुँजीवादको मात्राको लागि नेपाललाई कसी लाउने हो भने हामी १४९ वटा देशभन्दा पछि छौं | विश्वको सबैभन्दा पुँजीवादी अर्थतन्त्र हंगकंग तिर भन्दा पनि विश्वको सबैभन्दा अनुदार अर्थतन्त्र साम्यवादी उत्तर कोरिया तिर हामी धेरै नजिक छौ | सम्पत्ति अधिकारमा १०० मा ३० अंक, भ्रष्टाचारबाट मुक्ति पाउनेमा १०० मा २१.३ अंक, व्यवसाय गर्ने स्वतन्त्रतामा १०० मा ५८.५ अंक, श्रम स्वतन्त्रतामा १०० मा ४३.८ अंक, मौद्रिक स्वतन्त्रतामा १०० मा ७६.३ अंक, सरकारी खर्च मा १०० मा ८९.६ अंक, वित्तीय स्वतन्त्रतामा १०० मा ८५.९ अंक, व्यापार स्वतन्त्रतामा १०० मा ६१ अंक, लगानी स्वतन्त्रतामा १०० मा ५ अंक र वाणिज्य स्वतन्त्रतामा १०० मा ३० अंक साथ नेपाल त्यो स्थान रहेको छ | यस अर्थमा हेर्दा नेपालभन्दा बरु चीन वा भिएतनाम नै बढी पुँजीवादी र आर्थिक रुपमा स्वतन्त्र छन् | ती क्षेत्रमा नेपालले पाएको अंकमा विवाद गर्ने थुप्रै ठाउँ होला तर यी अंकले इंकित गर्ने अवस्थाको बारेमा सायदै दुई मत होला | के नेपालमा सम्पतिको अधिकार, विशेष गरी गरिब र पहुँचविहिन जनताको सम्पति अधिकार सुनिश्चित छ? के नेपालमा नयाँ तथा साना उद्योगहरुलाई बजारमा सजिलै प्रवेश गर्न र प्रतिस्पर्धा गर्न सम्भव छ? के नेपालमा सरकारी अनुमति नलिकन सहजै रुपमा आर्थिक क्रियाकलापमा संलग्न हुन सम्भव छ ? के नेपालमा विधिको शासन छ? के नेपालमा सबैलाई समान रुपमा कानून लाग्छ ? यी प्रश्नहरु मध्ये सायदै कुनै प्रश्नको उत्तर सकारात्मक आऊला |
जबसम्म यी कुराहरु सुनिश्चित गर्न सकिदैन, तब सम्म नेपाली समाज वा अर्थतन्त्र पुँजीवादी भयो भन्नु र समाजमा विद्यमान् आर्थिक समस्याहरु पुँजीवादले गर्दा भएको हो भन्नु गलत मात्र नभई समस्या समाधानको बाटोको विपरित दिशामा हिंडनु हो | यो विकास र उन्नति कुर्दा कुर्दा आजित भएका नेपाली जनतालाई शब्दजालमा भुलाउने काम बाहेक अरु केहि होईन | नेपाली राजनीतिक दल र विद्वानहरुले यो कुरा स्वीकारेको दिन नेपालको लागि ठूलै सकारात्मक कदम हुनेछ |
Have you ever wanted to own a vehicle? If you are like most Nepalese, you might have always wanted to. But guess what? Our government thinks we are not good enough to own a vehicle. According to our rulers, vehicles are luxury items and not every Nepalese should own or use one. It is for the elites, rulers and crooks only. Don’t believe it?
The government charges a whopping 241% taxes and duties on vehicles imported from abroad which means every vehicle. This is the highest imposition of taxes in the world. Hence, when world’s cheapest car entered Nepal, it was 7 times more expensive than it was in its birthplace. This has resulted in a scenario where only the rich people can afford private vehicles, especially cars. And oh yes, government officials and politicians enjoy ultra expensive vehicles paid for by the taxes by the general public. Needless to say, the third group – crooks manage to get around the barriers and get what they want anyway.
You may think, that’s for our own good. The government is here to look out for us. The government wants us to use public transport, save our foreign exchange reserves and the environment. Well, that is true as far as the theory goes. In practice, the question would be: has the 11 billion plus revenue generated from import taxes, duties and road taxes and license fees translated into better roads, better public transport and better traffic management? Not exactly! In fact, unfortunately it works the other way round. Because of the poor road conditions, unreliable public transport system more people are opting for private vehicles. Nepal could very well be only country without a mass transit system in the world. The public transport runs by cartels is as unreliable and as costly as things can become when impunity from both crime and competition is granted and ensured by the government. Roads construction is one of the places where one can see blatant and shameless corruption and government negligence in action. Roads being black topped during rainy season and lasting only for a few weeks before they are patched again is not a new scenario for us. In fact, the process has been repeated so many times that it fails to surprise commuters anymore.
Because of the high taxes and the resulting increase in prices, primary medium of transport for many Nepalese, especially for those living in the cities, is two wheelers. Two wheelers are inherently less safe compared to other vehicles resulting in more fatalities during accidents. The risk has been increased tremendously by the condition of roads and lack of traffic rules enforcement. As a result, we lose thousands of precious lives. Roads are relatively safer for the rich but not for the poor because our government thinks safer and more comfortable vehicles are a luxury not a necessity even though Nepal is among the nations with least penetration of vehicles. About 1.7 million vehicles have been registered in Nepal till date which is just 5.67 percent of the total population.
Meanwhile some people argue, justly in many cases, that reduction of import duties will lead to more people owning vehicles and eventually more congestion and pollution. Most of the time, the concern is sincere. However, what is not being realized here is that these problems are endemic to urban centers and cities only. Once we venture, out of the cities and beyond the hills, the problem with majority of our roads is not congestion but lack of enough vehicles to make them sustainable. The highest vehicle per day (VPD) in Nepal is among the roads in the Nepal-India borders which get 2500-3000 vehicles per day. On the other hand, most of our roads get only 300-1000 vehicles per day making it hard to sustain the regular maintenance and upgrade of these roads.
In this context, it is high time that we discuss when the world is thinking of space tourism in space vehicles why should we Nepalese be thinking of a simple four-wheeler with wistful eyes.
Last month, international development organization Oxfam released a startling figure about the wealth gap between richest people in the world and the poorest half. According to the report, 85 of the wealthiest people in the world own as much wealth as the poorest half of the world. The figures are disturbing to anyone regardless of their political inclinations and their profession. As usual, the leftists rushed in to embolden their criticisms against capitalism and free market system. Nepalese media and public intellectuals have too picked up the issue. The issue is of utmost importance to Nepal as well since it ranked 157th in the Human Development Index 2013 and the Gini Coefficient is 32.8 suggesting a significant income inequality.
High levels of inequality are not desirable for any society wishing to achieve sustainable growth and peace. Inequality does not only have economic implication but also social and political implications. Desiring a more equal society, therefore is justifiable. But the question here is: does free market capitalism create inequality or it is because of lack of free market capitalism inequality arises? The question here is not just why 85 richest people own more than the poorest half of the world but also, more so in my view, why does the poorest half of the world produces and owns so little?
It is interesting to note that majority of the poor in the world live in societies that are miles away from free market system and are supposedly pursuing policies aiming equality and wealth redistribution. India alone hosts one-third of the world’s poor and until 1990s, its major policy thrust had been wealth redistribution and state control of the economy. China which is another major home for world’s poor, started down the path of market economy only after disastrous 3 decades of anti-market and supposedly pro-poor policies. By moving towards market economy and promoting growth rather than redistribution, India has reduced its poverty rates from 51% in 1991 to 22% in 2013. China has achieved an ever more impressive progress by reducing poverty rates from 84% in 1981 to around 12% in 2013. What critics of market system have left out is the fact that the wealth distribution around the world was even more skewed before 1990s when many countries around the world started moving towards market economies.
Empirical studies conducted in the context of developing countries have also found that economic freedom and income inequality have inverse relation suggesting that higher degree of economic freedom would result in lesser income inequality. For instance, a study titled “Economic Freedom and the trade-off between inequality and growth” conducted by economist Gerald W. Scully has found that economies with higher economic freedom not only enjoy higher growth rates than less free economies but they are also more equal. Economic freedom reduces inequality by increasing the share of market income going to the poor and lowering the share going to the rich. Economic Freedom of the World Index, a cross-country study on economic freedom conducted by Fraser Institute of Canada also shows that freerer societies are comparatively more equal than societies with lesser economic freedom.
Therefore, gap between rich and poor either in terms of income or in terms of wealth stems from the fact that many of the societies that are home to the world’s poorest people do not have as much economic freedom as the richer societies. In this context, it is imperative that governments and civil society focus on spreading economic freedom to the poorer societies rather than using inequality as an excuse to push more populist and redistribution policies which will ultimately harm the poor even more despite having noble intentions.