NEPAL

Nepal



Nepal

Outline

Abstract

Introduction

History

1. Economic development

Main body

Method

Results

Conclusion

References

Abstract

Nepal is a small, landlocked country in South Asia with a largely agrarian economy. It is the poorest country in South Asia, with a per capita income of US$240 in 2002 (World Bank, 2002). The incidence of income poverty in Nepal is high, with over 40% of the population living in poverty (Nepal Living Standards Survey, 1996). Levels of human development are also markedly low, even in comparison with the rest of South Asia. Rural deprivation in Nepal is stark. The incidence of poverty in rural areas is double that of urban areas and levels of human development in urban areas far outstrip those of rural areas.

Introduction

The 1990s was a period of important social and economic transformations in Nepal. For much of its modern history, Nepal has been an authoritarian state. Struggles for democratization since the 1950s finally resulted in the emergence of multi-party democracy and the introduction of a new constitution in 1990. Democratization brought expectations of greater political freedom, social mobility and economic advancement. In practice, however, problems relating to the transition to democracy have been marked (Goodhand, 2000).

History The establishment of democratic institutions has been weak. Traditional e´lites have maintained their dominance in society, re-legitimizing their influence through the institutions of democracy (Brown, 1996). Whilst democracy gave access to political power to the professional middle classes, left-wing parties and representatives of marginalized social groups remained sidelined from the e´lite-dominated political process. The early 1990s also saw a distinct shift in economic policy as Nepal embarked on a programme of far-reaching structural adjustment.

This programme had the standard set of objectives of adjustment packages—stabilization, the creation of the “correct” price incentives for increased private sector economic activity, a contraction of the economic role of the state, the reduction of fiscal deficits and increased openness. The positive effects of these reforms on both economic growth and poverty, however, have been limited. GDP growth rates, which averaged around 5% per annum during the 1990s, were not significantly higher than during the pre-reform decade, the 1980s. Growth also fell sharply to 2.7% per annum between 2000 and 2003, partly as a result of war and political crises.

Economic development

More than a decade following the introduction of reforms, poverty in Nepal also remains widespread. The incidence of income poverty increased from 33% in 1977 to 44% in 1996, largely due to a sharp increase in rural poverty.2 More recent estimates show that around 40% of the Nepalese population have continued to experience absolute income poverty since the late 1990s (National Planning Commission, 2003).3 It was during this period of economic and political transformation that violent civil conflict broke out in Nepal. The conflict began when Maoist guerrillas launched a “People's war” against the state in 1996. The Maoists come under the political umbrella of the Communist Party of Nepal—CPN(M)—a party that emerged largely as a response to the marginalization of left-wing parties in democratic politics from ...