This post is originally written by angie picardo, staff writer for NerdWallet
Economic Development in Nepal
Nepal is, to put it bluntly, a fantastic place to visit but a terrible place to stay. Staggeringly beautiful, the landlocked South Asian sovereign state is home to the world's tallest mountains, and diverse climatic zones ranging from tropical to Arctic. Its rich culture includes pilgrimage sites for Hindus and Buddhists all over the world, as well as over one hundred native languages. Unfortunately, its most recent Global Hunger Index and Human Development Index rankings, 54 of 81 and 157 of 187 respectively, place it far behind other nearby developing countries in South and Southeast Asia. Between 30% and 40% of its population of 26 million live below the international poverty line, on less than $1.25 a day. The income gap is considerable, with the lowest 10% controlling only 2.5% of the country's wealth. Less than half have access to electricity, while only two in three are literate.
Nepal's stunted economy and development is attributable to its landlocked and largely impassable location, few national resources, overpopulation and a tumultuous political past, which includes a decades-long civil war and no government that has been able to survive more than two years since 1991.
Given its history of instability and chronic poverty, Nepal's potential to develop a modern economy that reflects the principles of sustainability is on tenuous ground at best. 80% of the population works in the agricultural sector in a country where only 20% of the total area is cultivable. This in turn is aggravated by the deforestation and desertification needed to provide biomass fuel and make room for a burgeoning population that has doubled since the 60s and is projected to double again by 2025. The lack of readily available employment led many Nepali men to seek work abroad. This reduced labor force puts more work pressure
on women, who traditionally do not migrate due to societal mores, and children, lowering education opportunities and continuing the vicious cycle. With such a severely limited cultivable land base, it's clear that agriculture alone will not solve the issue of poverty in Nepal. If long-term growth is sought, then it must be sought in the expansion of sectors outside agriculture, such as service and industry, and in particular, energy.
With no natural gas, coal or oil deposits, Nepal imports all its fossil fuels from India, a costly transaction that eats over a quarter of the nation's foreign exchange earnings. Much of the rest of the energy need is covered by wood fuel and agricultural waste. Due to the Nepal Electricity Authority's inability to keep up with an annual 10% increase in power demand, rolling blackouts are common. Severe load shedding is projected to continue well into 2017. The economic losses from these interruptions and imported fossil fuels suggest that development of sustainable energy sources and infrastructure is of crucial importance to the region.
While Nepal and India have agreed to the construction of several high voltage transmission links for bulk power exchange, this is not a viable long-term solution as India suffers from energy shortages of its own and will not be able to export enough power to support the industrial needs of Nepal. Perhaps better solution would be the wide-scale implementation of renewable energy technologies. Solar power is estimated to have the potential to generate 26,000 MW of electricity for Nepal, and with an average of six hours of sunlight 312 days a year, the wide-scale utilization of long-term renewable energy could prove an effective answer to the problem of load shedding.
In addition to solar, hydroelectricity presents another possible long-term solution. The perennial Nepali rivers combine with the country's topography resulting in ideal conditions for hydroelectric projects, with estimated yields as high as 83,000 MW of electricity. This surplus would easily provide for the country's current power draw as well as for the large minority who are still without basic access.
As optimistic as the above assumptions are, the insufficiency of Nepal's resource base will continue until productivity growth is coupled with social reforms vis. a vis. excessive population. Such movements will not occur overnight; in the interim the overwhelming number of the impoverished necessitates a sustained support program. With too few resources to be considered for subsidy programs, institutions need to be in place to ensure an efficient allocation of funds from government relief, foreign aid, private donors and charities.
There is no easy solution to the problems Nepal faces as a developing country. Nor is there a quick one. Ultimately, all growth, economic or otherwise, is contingent on how Nepal addresses its social issues in the near future, from access to roads and adequate nutrition, to the emancipation of women and the education of children. Whatever eventually andbrings this geographical cultural wonder in step with the rest of the world will happen over a considerable length of time, and it will not pass through unopposed. Until then, it will continue to endure, an old land, as weathered and resolute in its survival as the mountains that tower over it.
I really want to thank for the contribution made by Angie to write such useful article, I really appreciate her work. Nepal is currently facing a great economic problem, angie has reported a good solution for such problem in this article.
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