Nepal: Critical Development Constraints (Country Diagnostics Studies)

Front Cover......Page 1
Title Page......Page 2
Copyright......Page 3
Foreword......Page 4
Preface......Page 6
Table of Contents......Page 8
Abbreviations......Page 9
1.2. Methodology......Page 10
Figure 1.1. Growth Diagnostics Framework......Page 11
1.3. Organization of the Study......Page 12
Figure 1.2. Diagnostics Framework for Inclusiveness......Page 13
2.1. Political Context of Economic Growth......Page 14
Table 2.1. Annual Average Growth Rate of Real Gross Domestic Product (%)......Page 15
Table 2.2. Per Capita Gross Domestic Product in 2000 dollars......Page 17
Table 2.3. Annual Average Real GDP Growth and the Contribution of Major Production Sectors to GDP Growth (%)......Page 18
Table 2.4. Sectoral Contribution to GDP Growth (percentage points)......Page 19
Table 2.6. Contribution to GDP Growth by Expenditure Component......Page 20
Figure 2.4. Regional Share in Sectoral Value Added, 2001......Page 21
Table 2.7. Annual Average Growth of Total Factor Productivity in Selected Asian Countries (%)......Page 22
Figure 2.8. Poverty Incidence by Ecological Belt (%)......Page 23
Table 2.11. Growth and Redistribution Decomposition of Poverty Changes in Nepal from 1995/96 to 2003/04......Page 24
Table 2.12. Human Development Index, 1975–2005......Page 25
Figure 3.2. Nepal’s GDP Growth and Investment Rate (%)......Page 27
Figure 3.6. Gross Domestic Savings in Selected South Asian Countries 1985–2007 (% of GDP)......Page 29
Figure 3.8. Remittance In flows and Out flows ($ million)......Page 30
Figure 3.11. Financial Sector Assets (NRs billion)......Page 31
Figure 3.14. Ratios of Domestic Credit to GDP in Selected South Asian Countries......Page 32
Figure 3.17. Available and Required Reserve Assets of the Banking Subsector, in NRs million......Page 33
Figure 3.20. Trends in Lending Rates (%)......Page 34
Figure 3.21. GDP Per Capita Growth Rates and Lending Rates (%)......Page 35
Figure 3.22. Bank Branches and Inhabitants per Bank Branch......Page 36
Unknown......Page 0
Figure 3.24. Social Returns in Selected South Asian Countries (%)......Page 37
Figure 3.26. Educational Attainment of the Workforce in 2008 (%)......Page 38
Table 3.2. Nominal Monthly Wages in Major Sectors (NRs)......Page 39
Figure 3.28. Workers Going Abroad to Countries Other than India......Page 40
Figure 3.31 Expenditure on Selected Sectors, (% of government expenditures)......Page 41
Table 3.3. Comparative Infrastructure Indicators......Page 42
Consumption in Selected South Asian Countries......Page 43
Figure 3.36. Power Availability by Source ( GWh)......Page 44
Table 3.5. Comparison of Road Density and Access to All-Weather Roads in Selected South Asian Countries, 2007......Page 46
Figure 3.39. Disruptions of Traffic, 11 July to 17 August 2008......Page 48
Table 3.6. Improvement and Maintenance Costs of Roads......Page 49
Figure 3.42. Growth Rate in Gross Value Added of Agriculture and Non-Agriculture Sectors (%)......Page 50
Table 3.7. Water Requirements and Correlation Between Average Annual Rainfall and Yields for Major Crops......Page 51
Figure 3.47. Fiscal and Current Account Position (% of GDP)......Page 52
Figure 3.51. Inflation and Oil Price......Page 53
Figure 3.53. Net Transfer of Funds from Government to Public Enterprises (NRs million)......Page 54
Figure 3.54. GDP in Selected South Asian Countries (normalized at 2000=100)......Page 55
Figure 3.57. Foreign Direct Investment, 1995–2007 ($ million)......Page 56
Figure 3.59. Central Government Expenditure by Function (% of GDP)......Page 57
Figure 3.61. Reported Strikes and Blockades in 2008......Page 58
Table 3.9. Tax Rates in South Asia (%)......Page 59
Figure 3.63. Labor Related Strikes and Lockouts, 1991–2007......Page 60
Figure 3.65. Number of Cases in Labor Court......Page 61
Figure 3.66. Enterprise Feedback on Weaknesses in the Labor Law......Page 62
Figure 3.68. Composition of Domestic Manufacturing Value Addition (% of total)......Page 63
Figure 3.72. Evolution of Nepal’s Exports ($ million in 2003 prices)......Page 65
Five Year Plan......Page 66
Figure 3.75. Analysis of Strategic Value of Industries Targeted in 2008/09 Budget......Page 67
Box Figure 1. Product Space Tree......Page 68
Box Figure 2. Nepal's Product Space......Page 69
Figure 3.4. Fixed Investment Rate in Selected South Asian Countries (% of GDP)......Page 28
4.1. The Inclusiveness of Economic Growth......Page 71
Figure 4.1. Per Capita Expenditure Growth Incidence Curve (1995/96 and 2003/04, %)......Page 73
Figure 4.2. Lorenz Curves of Expenditure (1995/96 and 2003/04, %)......Page 74
Table 4.4. Relative Risk Ratios for Escaping from Poverty......Page 75
Table 4.4 continued.........Page 76
4.2.1. Lack of Productive Employment Opportunities......Page 77
Figure 4.3. Labor Productivity in South Asia (GDP in 2000 $/Labor Force)......Page 78
Table 4.6. Land and Labor Productivity (2003/04)......Page 79
Figure 4.4. Use of Improved Seeds by Region, Ethnicity/Caste, Gender, and Expenditure Quintile (1995/96 and 2003/04, %)......Page 80
Figure 4.6. Share of Sales in Gross Output by Region, Gender, and Expenditure Quintile (1995/96 and 2003/04, %)......Page 81
Table 4.8. Occupation Patterns of Household Heads (2003/04, %)......Page 82
Figure 4.7. Households with Enterprises, by Area and Income Quintile (1995/96 and 2003/04, %)......Page 83
Figure 4.9. Destination of Migrants by Expenditure Quintile (1995/96 and 2003/04, %)......Page 84
Table 4.10. Households Receiving Remittances (1995/96 and 2003/04, %)......Page 85
Table 4.11. Average Per Capita Remittances Received (1995/96 and 2003/04, real 1995/96 NRs)......Page 86
Figure 4.11. Primary School Net Enrollment Rates by Region, Ethnicity/Caste, Gender, and Expenditure Quintile (1995/06 and 2003/......Page 87
Table 4.12. Benefit Incidence of Public Expenditure on Education in Nepal (1995/96 and 2003/04, % of total spending)......Page 88
Table 4.13. Reasons for Not Attending School (2003/04, %)......Page 89
Figure 4.14. Access to Health Center by Region, Ethnicity/Caste, and Expenditure Quintile (1995/96 and 2003/04, %)......Page 90
Figure 4.15. Percentage of Fully Immunized Children Aged 5 or Younger by Region, Ethnicity/Caste, Gender, and Expenditure Quintile......Page 91
Table 4.14. Distribution of Health Consultations by Practitioner (2003/04, %)......Page 92
Figure 4.19. Access to Piped Water by Region, Ethnicity/Caste, andExpenditure Quintile (1995/96 and 2003/04, %)......Page 93
Figure 4.21. Access to Paved Road by Region, Ethnicity/Caste, and Expenditure Quintile (1995/96 and 2003/04, %)......Page 94
Figure 4.23. Access to Electricity by Region and Expenditure Quintile (1995/96 and 2003/04, %)......Page 95
Figure 4.24. Source of All-Loans by Expenditure Quintile (1995/96 and 2003/04, %)......Page 96
Table 4.18. Interest Rates by Source (1995/96 and 2003/04, %)......Page 97
Table 4.20. Use of Remittances by Area and Expenditure Quintile (2006, %)......Page 98
Table 4.21. Land Ownership and Access to Irrigation (1995/96 and 2003/04)......Page 99
Table 4.22. Decomposition of Land Inequality by Ethnicity/Caste and Geography (1995/96 and 2003/04, %)......Page 100
Table 4.23. Social Protection Index......Page 101
4.3.1. Exclusion......Page 102
Table 4.24. Percentage of Dalit and Janajati Teachers by Type of Schools and Level (%)......Page 103
Table 4.25. Public Expenditure on Education and Health......Page 104
4.3.3. Other Causes......Page 106
5.1. Key Features of the Current Governance Context......Page 107
5.2.1. Inadequate Infrastructure......Page 110
5.2.2. Labor Markets and Industrial Relations......Page 111
5.2.3. Small, Narrow Industrial Base......Page 112
5.2.4. Economic and Social Exclusion......Page 113
5.3. Implications for Development Partners......Page 114
6.1. Key Constraints to Accelerating Inclusive Economic Growth......Page 116
6.2.1. Accelerating Economic Growth......Page 117
Strengthen Governance......Page 118
Accelerate Infrastructure Development......Page 119
Power......Page 120
Improve Industrial Relations and Make Labor Markets More Flexible......Page 121
Support Expansion and Diversification of the Industrial Base......Page 122
Access to Employment Opportunities......Page 123
Access to Safety Nets......Page 124
Improved Allocative and Operational Efficiencies......Page 125
Figure 6.1. Three Pillars of Inclusive Growth......Page 127
Bibliography And References......Page 128