Nepal's Over Dependency And Sluggish Development

Nepal has been vulnerable nation due to declining production, weak infrastructures, and its health, education, and living standards- are framed as the antithesis of a “developed,” modern, or industrialized state.

Sept. 30, 2022, 1:29 p.m.

After end of global colonization era, developed countries have changed their strategy by entering through market mechanisms and powerful institutions in the internal dynamics of developing countries.

In this changed context, many poor countries transformed their economy through right national policies and correct strategies coping with new order of global dynamics.

Only some countries remained underdeveloped as result of their excess dependency and faulty economic models.

During the 1980s, Rwanda and Ethiopia, both land locked countries in Africa were continually ranked as the poorest countries. They were highly dependent with their neighbors for trade and transit facilities; poverty and underdevelopment were major problems there.

By that time, they were portrayed as countries of famine and hunger, while Nepal was economically performing better in comparison. Fast forward to the 2000s, and the position is completely turned over. Both Rwanda and Ethiopia developed their economies, keeping up to countries representing middle-level economies.

Nepal remained where it was as a least developed country and still facing ever increasing external dependencies.

Paul Kagame of Rwanda and Meles Zenabi of Ethiopia, both emerged as presidents, who transformed the economy even though they had despotic backgrounds.

On the contrary, Nepal never got a visionary leader who pursued economic viability as serious slogan in his entire career.

Nepal had never been colonized by any powerful nation, while numerous developing countries suffered from colonization of developed countries. Nepal, only internally colonized by autocratic Rana regime for 104 years and party less Panchayat system with absolute monarchy for 30 years. Even after the multiparty democracy in 1990 and abolition of the monarchy in 2008 till date, Nepal could not bring meaningful reforms in minimizing external dependency and satisfactory transformation of economy as well.

Nepal's development is specified by low incomes, food deficits, unemployment, marginalization of women, widening gaps between rich and poor, dependency on foreign aid, political instability and corruption.

Nepal is strategically and economically dependent on two giant neighbors for almost all imports, of which many items are critical — and in some cases, these could pose not only threat to economy, but it can create high dependency on items of national security as well.

Nepal exports only raw materials and primary products in cheap prices in small quantities and it imports almost all finished products of high prices. Its import-export ratio 90:10 represents unhealthy sign in economy, for every export value of Rs 10, it imports equivalent Rs. 90 from outside. As result of Nepal's excess imports and minimal exports, its economy is high dependent with other countries especially with neighbors.

Among its neighbors, India monopolizes Nepal’s vital supplies system caused by Nepal’s inability to produce internally -from sensitive materials to petroleum products, medicines, foodstuffs, and other essential items.

All countries are dependent on each other for better growth and development. However, domination and dependency have their own distinct meanings. Domination refers to one-sided intervention and interferences by rich to poor countries, compelling them to be dependent on them, whereas dependency is like two sides of a coin; both rich and poor are interdependent on each other for mutual benefits.

Nepal has been vulnerable nation due to declining production, weak infrastructures, and its health, education, and living standards- are framed as the antithesis of a “developed,” modern, or industrialized state.

According to a report on Nepal Multidimensional Poverty Index, in 2019, 17.4 percent of Nepalese are multidimensionally poor – just under five million persons, and the MPI is 0.074. Across indicators, the highest number of people are deprived in housing materials, clean cooking fuel, years of schooling, assets, and nutrition.

Income inequality is apparent in both urban and rural areas, has been affected by many forms of inequality, such as inequalities of wealth, political power, and social status.

There are difficulties to address the growing issue lies in one major difference between extreme poverty and inequality: it is possible to eradicate extreme poverty within a period of decades, the challenge of inequality, on the other hand, is often perennial.

The economic gap between developed districts like Kathmandu, Biratnagar and Birgunj measured against the undeveloped districts like Mugu, Bajura and Saptari are as stark as the inequality between Europe and Africa.

Around one fourth of population are below poverty line, who earn less than US$ 1.90 per day. Poverty has multidimensional effects to worsen development. The vicious cycle of poverty has affected every sphere of the nation.

Low economic growth led to a shortage of employment opportunities at home, which is fueling more labor outmigration. As a result of the flawed economic model, every year millions of youths are going to Gulf countries and Malaysia in search of jobs. Being happy only on remittances send by the workers from abroad and by spoiling the real productive sectors of economy, Nepal’s economy is in the edge of most likely to be crashed in any moment sooner or later.

Underdevelopment is considered as an externally influenced process which is bolstered by a small but influential domestic elite who form a coalition with the international bourgeois system. The “development of underdevelopment" is thereupon systematic and path dependent.

Donors are pouring money in Nepal and its developments are in failed state, public debts are rising, foreign currency reserves are declining, and foreign investors hesitate to invest here as the investment climate is shockingly unsuitable.

Nepal with long-term aid dependency remains unable to be self-sufficient and is less likely to make meaningful GDP growth. Food dependency is damaging its domestic production and external influences in educational structures and education content have made us dependent to follow their footprints. Nepal's dependency on many policy level decisions based on donor's agendas are not well suited to peoples' aspirations.

Without a drastic change in its overall state strategic thinking from the new beginning, the present pace of working style could be more desolating for Nepal.

Only changes in political system could not bring stability in entire systems and the dismantled and divided bureaucratic system with high political interferences have not been supportive to good governance and development of nation. Its economic policy, government capacity, citizen capacity, and economy’s capacity are still far from acceptable standards.

Moreover, Nepal never learned lessons to be self-reliant even after many border blockades, a great earthquake, and pandemics, which created an extreme shortage of essential items and supplies.

To break the barriers of dependency and underdevelopment Nepal needs a comprehensive approach that will both boost investment and accelerate productivity by breaking down policy barriers, building new sources of growth in hydropower, revitalizing existing sources of growth in agriculture and investing in people.

Nepal cannot get more excuses for being least developed always blaming internal maladministration, policy failure and landlocked conditions.
Now it up to Nepal to choose whether to remain in bottommost of the world economy or to emerge as country of dependent and developed economy?

( Shrestha is a former Under Secretary at Ministry of Finance, Nepal and Expert in UNDP Africa)

Hari New Photo.jpg

Hari Prasad Shrestha

He worked under Ministry of Finance, Nepal as Under Secretary and has been associated with the United Nations Development Program (UNDP) Sierra Leone and South Sudan and UNMISS.

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