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Nepal: An analysis of competitiveness

Nepal is in 100th position of the competitiveness list.It has increased its rank from 102 to 100 over a span of 1 year. The report takes into account a number of factors like commodity price fluctuations, geopolitical uncertainties and security issues. Nepal’s overall performance is 3.85 over the scale of 7 which is same as that of Kenya (1).

From a Geo-Political perspective, before 2006 a so-called revolution to overthrow the constitutional monarchy , which was more like a civil war, was the most prominent reason for the set back of Nepalese economy. There were strikes for days and it was extremely difficult for the businesses to maintain the even the break-even level. Many of the hydro-power houses were destroyed which had a direct negative impact, specifically in the manufacturing industries. After the success of the political movement, the number of strikes and violence decreased gradually, which was a spring season for the economy. India was playing a major role in the political scenario, dominating largely the Chinese influence (2) .

Recently, some months back, a new constitution is promulgated in Nepal which is attracting international investors, specifically in the hydro-power sector. A note-worthy point here is, Nepal is the second-richest country in water resources after Brazil. An investment in hydro-power project gives a very promising return. Furthermore, the Nepalese seem to have understood this opportunity and so, the investment in hydro-power is increasing on yearly basis. Last year, the construction of biggest hydro-power of the country was initiated which was solely invested upon by the Nepalese without any foreign investors. Also, the share market index (also know as NEPSE) seems to have a gradual rise in the past few years (3). There was a huge fall in the share market during the period of revolution. This lead to bankruptcy of many investors. With the gradual political stability, the share market index is rising, thus improving the confidence of investors.


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The main occupation of the country is Agriculture. It is accountable for 60% of GDP and 75% of the exports.Since the formulation of the Fifth Five-Year Plan (1975–80), agriculture has been the highest priority because economic growth was dependent on both increasing the productivity of existing crops and diversifying the agricultural base for use as industrial inputs (3). Sugarcane, Oil seeds, tobacco, medicinal herbs are some of the largely produced cash crops. The government is putting more emphasis in attracting youth in agriculture by providing initial investments for free and reducing the interest rate on the agricultural loans largely. This policy has become successful in drawing more and more youth in the agricultural sector (4).

Human resource is another booming industry. Nepal has become a popular cheap labor resource for  countries like Dubai, Qatar, Bahrain, UAE , and also Israel ,Malaysia etc. One of the biggest sources of income of the country at present is the remittance received from this labor market. Furthermore, due to the its low currency value, Nepal is also popular outsourcing hub for the information technology market. There has been a gradual increase in investment in IT businesses, whose major target is to have a foreign outsourcing contract, more than enriching the technological standards of the nation.

Nepal was open to the rest of the world after the 50’s. Tony Hagen’s documentary on Nepal is also accredited for drawing the world’s attention (5). After 90’s, when the country actually started keeping records of the tourists visiting the country, it could be seen that the number of tourists visiting each year is gradually increasing. Tourism is the largest industry in Nepal and is the major source of foreign currency and revenue. The recent earthquake  was a huge blow to the country’s economy. More than any other sectors, Tourism sector was greatly affected. If the country focuses on reconstruction and introduces strong campaigns like “Visit Nepal ’98” (6), it could be a very good travel destination given the land diversity, adventure options and varieties of animals and birds found.




  1. Competitiveness: Reports highlights ( http://reports.weforum.org/global-competitiveness-report-2015-2016/report-highlights/ )
  2. Archives: Indian Express ( http://archive.indianexpress.com/news/as-nepal-maoists-meet-7party-reps-in-delhi-revolt-at-home/415/ )
  3. Wikipedia: Agriculture in Nepal ( https://en.wikipedia.org/wiki/Agriculture_in_Nepal )
  4. Agriculture Development Bank: Brocher ( http://www.adbl.gov.np/doc/newsletter/130128085914_ADBL%20Brochure%20English_FINAL.pdf )
  5. Tony Hagen’s Documentary https://www.youtube.com/watch?v=698bRqBM4iU
  6. Visit Nepal ’98 ( http://www.travel-nepal.com/vny98/ )
  7. Export Diversification and Competitiveness: Nepal’s Experiences ( http://www.nrb.org.np/ecorev/pdffiles/vol21_art3.pdf )


So, what do you think ?