Investment In Nepal Research Articles

Trilateral Dynamics of India–China–Nepal: Assessing Geo-strategic Relations in South Asia

The strategic importance of South Asia stems from its natural resources and advantageous location. However, in recent years, China and India’s rivalry in the subcontinent has altered the geo-strategic landscape in the region. Though much had been explored in the trilateral dynamics of India–China–Nepal, comparative analyses to empirically assess the relative strength of the relationships have been overlooked. Hence, the current paper examined the dynamics of these three countries by evaluating their ability to uphold their ties. It looked at India’s neighbourhood first policy with a particular focus on Nepal, and it further examined how China uses the Belt and Road Initiative (BRI) as a springboard to utilise it as a geopolitical manoeuvre to offset India’s hegemony in the area. On the empirical front, the paper examined the pattern of investment from China’s BRI in Nepal and contrasted it with China’s overall investment trends in Nepal. The paper argues that although BRI investment in Nepal is increasing, there is a significant decline in the overall investment from China. In contrast, India’s investment in Nepal had an upward trajectory that surpassed China’s investment volume. The paper discussed potential ways to achieve trilateral relations among these three countries by promoting sustained cooperation.

Impact of Per Capita Health Expenditure on Child Health Outcomes in Nepal

This paper explores the relationship between child health outcomes and per capita health investment in Nepal, using key indicators such as child mortality rate, stunting, skilled birth attendance, and appropriate treatment for acute respiratory infections. The study utilizes the data primarily from the World Bank and the Ministry of Finance in Nepal. The study adopts quantitative analysis techniques, including correlation and regression analysis, to assess the impact of health investment on child health outcomes. The results show that increased per capita health expenditure is positively correlated with improved child health outcomes which shows linear growth in different variables if compared with the per capita investment done in health. There is a negative correlation between per capita health expenditure and child mortality under 5 years of age and this is evidenced that increased per capita health expenditure reduces the child mortality among under 5 years of children. Thus, the study aims to highlight the importance of allocating resources in policy reforms, capacity building and allocating resources in the health sector. The study also incorporates relevant resources from scholarly articles and academic literature to provide a comprehensive understanding of the topic and support the analysis regarding the relationship between per capita health investment and child health outcomes.

Exploring the Impact of Remittance Inflows on Investment Patterns: A Case Study of Rupandehi District, Nepal

Remittance inflows have surpassed other sources of foreign currency in many developing countries, with Nepal ranking among the top five recipients relative to its Gross Domestic Product (GDP). This study examines the impact of remittances on investment in Nepal, particularly in the Rupandehi district. With remittances growing at an annual rate of approximately 20%, they significantly influence the Nepalese economy. A survey involving 404 respondents explored how remittance funds are utilized across various sectors, including land purchases, housing reconstruction, share market investments, small business ventures, and electronic appliance acquisitions. The findings reveal that while there is no significant association between remittance amounts and land purchases or housing reconstruction, a significant link exists between remittance amounts and the types of houses purchased or reconstructed. Additionally, no significant association was found between remittance amounts and business investments or the purchase of electronic appliances and internet services. The study also indicated no significant relationship between migrant education and investments in land, housing, or the share market; however, a strong association was noted between the number of migrants and land purchases. These results suggest that while remittances contribute to various investment avenues, their impact varies across different types of investments. Keywords: remittance, investment, GDP, economic growth, migrants

Effectiveness of Foreign Aid on Economic Growth of Nepal

This study investigates the impact of foreign aid on the economic growth of Nepal from 1975/76 to 2021/22, with a focus on the association between foreign aid and private investment. The research utilizes secondary data from the National Reserve Bank (NRB), Ministry of Finance (MOF), Central Bureau of Statistics (CBS), and other related government agencies. The study employs the models to analyze the impact of foreign aid on economic growth and investment in Nepal. The Ordinary Least Square (OLS) method is used to establish a simple relationship between the variables under study. The study reveals that foreign aid positively affects the GDP growth of Nepal and is inversely related to private investment. Based on these findings, the following recommendations are made:
 Foreign aid plays a significant role in the development of some categories of people in Nepal, but most rural people do not benefit directly due to the ineffective use of foreign aid. The government should focus on improving the efficiency of foreign aid utilization to maximize its benefits for the entire population.
 The government should prioritize projects and initiatives that promote economic growth and private investment, as these efforts can help create a more sustainable and prosperous future for the country.
 In conclusion, this study highlights the importance of foreign aid in the economic development of Nepal and provides insights into the relationship between foreign aid, economic growth, and private investment. By implementing effective policies and strategies, the government can leverage foreign aid to foster economic growth and improve the lives of the Nepali people.

Time Series Analysis of the Foreign Direct Investment in Nepal: Economics Perspective

The main aim of this paper is to identify the major economic determinants of foreign direct investment in Nepal. In doing so, the Johansen-Juselius (JJ) cointegration approach as well as vector error correction model are implemented to identify the relationship among the macro variables. The empirical results revealed that all the variables are stationary at first difference and the evidence of cointegrating vector is obvious based on the JJ cointegration results. In addition, it is found that there is a long run relationship among the variables based on the coefficient of Error Correction Term (ECT). The long run coefficients show that Trade, GDP, exchange rate, and interest rate have a positive impact on FDI in Nepal, while, gross fixed capital formation (GFCF) and inflation (CPI) have a negative impact. Finally, in the short run, only one lag of FDI is affecting FDI. These results suggest that the inward FDI tends to incorporate information from the macroeconomic variables.

Financial Factors Affecting on Foreign Direct Investment Flows into Nepal

Foreign direct investment in Nepal has played a vital role in bridging the gap between demand for capital and supply of capital in the country as it has been facing scarcity of capital supply. The main objective of this study is to examine the role of financial variables on foreign direct investment flows into Nepal. Regression analysis and elasticity coefficient are used to examine the role of financial sector in foreign direct investment flows. The result shows that the coefficient of broad money supply (0.81), NEPSE index (-0.71) and total transaction in financial market (0.38) are the significant variables affecting foreign capital flows into Nepal. However, NEPSE index negatively affects foreign capital flows into Nepal. Since the Government of Nepal has undertaken various measures to raise FDI flows into the country, the government should carefully develop the financial sector as it is one of the prominent factors affecting the foreign capital flows.

Manufacturing Lumbini

This article draws attention to the United Nations' sustained development interventions at the Buddha’s birthplace of Lumbini, in the rural Terai region of Nepal. Following a self-described “pilgrimage” to Lumbini in April 1967, former United Nations secretary-general U Thant championed a call to restore the site to its rightful glory as a global pilgrimage destination and center of “world peace.” Despite fifty years of formal sponsorship by the United Nations, Lumbini’s development remains incomplete. This article has three main arguments. First, the UN’s sustained investment in Lumbini marks an unprecedented convergence between the international peacekeeping organization and expressions of religious piety and devotion. For many Buddhists, Lumbini is regarded as an auspicious place on par with Jerusalem or Mecca. Decades of interventions at Lumbini challenge normative assumptions concerning the UN’s secular authority. Second, through these sustained investments the UN became the preeminent patron of Lumbini, conferring to the international organization the power to mobilize Buddhist ethical principles in its peacekeeping agendas during the Cold War. Development interventions at Lumbini led to the appropriation of a pacified and politically benign Buddhist ethic premised solely on the Buddha’s teachings of compassion (karuṇā), good-will (metta), and nonviolence (ahiṃsā). These ethical maxims were harmonized with the UN Charter and redirected to justify the organization’s sustained investment in Nepal. Third, UN sponsorship of Lumbini brought together disparate political entities and religious organizations in service of a common goal, but friction amongst these stakeholders beleaguered the development proceedings throughout the latter half of the twentieth century. Despite these tensions, UN intervention has left an indelible mark on the accessibility of the site and its global prestige as a UNESCO World Heritage Site.

Foreign direct investment and stock market development in Nepal

PurposeThe purpose of this paper is to investigate the impact of foreign direct investment (FDI) on the stock market development in Nepal.Design/methodology/approachThe study used Johansen cointegration approach to determine long-run relationship and VEC Granger causality test to check the causal relations between the variables. The sample covered annual time-series data for the period 1996–2020.FindingsThe results suggest that FDI plays significant positive role in the stock market development in the long-run but inversely affect in the short-run. Unidirectional causality running from FDI to stock market development is observed in the long-run and bidirectional in the short-run. There is an insignificant positive relationship between exchange rate and FDI in the short-run. Banking sector development complements stock market development in the short-run but act as a substitute in the long-run. The statistically negative coefficient of exchange rate imply that the appreciation of the home currency encourage the development of the stock market in the long-run.Originality/valueThe positive and statistical coefficients of cointegration results indicate that FDI complements the development of stock market in Nepal in the long-run. Furthermore, the depreciation of the domestic currency may potentially contribute to the foreign direct investments in Nepal.

A Long-term Policy to Mitigate Load Shedding by Hydro Investment in Nepal

Nepal has been facing acute load shedding problem though it has a large potential for hydropower generations. The load shedding, which increased significantly over the past decade, has hindered overall economic growth of the nation. Several previous researchers concluded that the load shedding problem can be abolished with the dynamic pricing policy in short-run. They do not talk much about long-term solution. However, the hypothesis of this study is that the foreign direct investment policy for deficit financing of hydropower projects can eradicate the capacity shortage, increase the electricity supply, and mitigates the load shedding problem in long-run. 
 As load shedding is a dynamic problem that requires analysis by dynamics models, Stella Architect software is used to analyze and find solutions to the problem. The research concludes that at least 9% of the deficit financing must be covered by the foreign direct investment to increase the hydro capacity and electricity supply to mitigate load shedding over the policy period in future. The net present value of profits of Nepal Electricity Authority, the organization with the full responsibility of the production and distribution of electricity in Nepal, with the foreign direct investment policy is almost doubled than without policy.

WHY OPPOSE THE MILLENNIUM CHALLENGE CORPORATION IN NEPAL?

The construction project agreed with the Millennium Challenge Corporation (MCC) has become highly controversial in Nepal. According to MCC policy, the contract, signed in 2017 with the goal of increasing the availability of electricity in Nepal and reducing transportation costs, must be ratified by the Nepali parliament. Confusion and controversy arose, since the move would create a precedent for the ratification by parliament, if demanded, of each and every foreign investment in Nepal. There are also legal controversies when countries that receive MCC grants are required to comply with MCC provisions intended to ensure that projects are not hampered by changes in state law. A further controversial point is a provision that makes implementation of the MCC project conditional on approval from India. The MCC is actually a part of the United States’ broader Indo-Pacific Strategy (IPS), related to military pacts such as the QSD (Quadrilateral Security Dialogue) that are aimed at containing China. In such circumstances, how can Nepal maintain its stance as a non-aligned nation in relation to its giant neighbors? Leaders of various political parties, civil society organizations, and the general public in Nepal currently fall into two camps that either support or reject the MCC grant.

The future of hydropower development in Nepal: Views from the private sector

Private sector actors are taking on an increasingly prominent role in energy transitions, including in hydropower development and finance. Yet, there is little empirical research on the topic. This study covers private sector views on accelerating hydropower investment in Nepal, using Q methodology. Three main viewpoints were identified among 17 interviewed hydropower developers, planners, and investors based in Nepal: 1) Efforts need to be focused on reforming hydropower policies and administration at the national level; 2) Funds for hydropower development need to be increased and sought from a diversity of domestic and foreign private sources; 3) Nepal needs to integrate its energy grid with its South Asian neighbours, starting with India. Areas of strong disagreement include the role of political stability in enabling hydropower development, as well as modes of engagement with Indian, Chinese, and Western partners. Areas of consensus include the need to smoothen land acquisition procedures as well as discomfort with the state-owned Nepal Electricity Authority's perceived monopolistic status in the sector. Overall, this study contributes to debates on private sector involvement in hydropower development with a nuanced empirical assessment of views which contain clear visions for an independent and domestically driven future of the country's hydropower sector.

The Study on China’s Foreign Direct Investment in Nepal

The Study on China’s Foreign Direct Investment in Nepal

Impact of Double Taxation Avoidance Agreements on Foreign Direct Investment in Nepal

Developing countries like Nepal enter the Double Taxation Avoidance (DTA) Treaties agreements to increase inflow of Foreign Direct Investment. Since DTA avoid simultaneous tax payments by a taxpayer for same income or assets in multiple jurisdictions and be instrumental in promoting cross-border investments and capital transfer among DTA signing countries. However, empirical studies have shown mixed results. This study attempts to assess the impact of Double Taxation Avoidance (DTA) Treaties on inflow of Foreign Direct Investments (FDIs) in Nepal. This study uses a comprehensive panel database containing annual flow of FDI from 89 countries for the period of 1990-2016 as well as other factors that might affect FDI flow into the country. We used pooled OLS and fixed effect methods. The study finds that singing DTA agreement have had small but positive impact on the inflow of FDI. Specifically, Nepal receives, on average, between 91.90 to 216.54 million more FDI per country per year from countries with DTA agreement compared to countries without such agreement.

Foreign Direct Investment in Nepal

This article is about the relationship between Foreign Direct Investment(FDI) and Gross Domestic Product (GDP). It explores the FDI’s linkage with the national income. The data for the study comprised different factors that have a direct linkage with the national economy and its impact. This article is based on the FDI in various sectors in terms of the number of projects, employment created, and the amount invested. It is based on secondary data. The study revealed that FDI sometimes has an independent influence on the economy of the country. A fresh finding of this article is that the contribution of FDI in capital formation and employment is not significant in the Nepalese economy, eventually making less contribution to the GDP of the Nepalese economy. It also revealed that FDI comprises new technologies, management techniques, finance and market access for the production and movement of goods and services. So, Nepal should adopt policies to attract more FDI and implement accordingly.

Financial Sector-Specific Determinants of Foreign Direct Investment in Nepal

This study examines and analyses the impact of financial sector-specific determinants on FDI inflow to Nepal. The Engle-Granger cointegration and error correction models were employed to test the long-run and short-run relationships between the dependent and independent variables using the time series data from 1994 to 2020. The Augmented Dicky Fuller (ADF) test was adopted to test the stationarity of the variables. Similarly, the Breusch-Godfrey serial correlation LM test, the Breusch-Pagan-Godfrey test, the VIF test, and the CUSUM of the square test were employed to detect the presence of autocorrelation, heteroscedasticity, multicollinearity, and the stability of the model. The study's findings revealed a negative significant relation between the NEPSE index and the FDI inflow to Nepal in the short run. All other independent variables are insignificant with FDI inflow in the short run. Similarly, interest rate, broad money supply (M2), and inflation positively correlate with FDI in the long run while the NEPSE index is insignificant in the long run. Broad money supply is found to have the strongest impact on FDI inflow among the independent variables. The study's findings suggest that policymakers should keep increasing the money supply at a stable and sustainable rate maintaining a moderate level of inflation and interest rate in the economy to attract a significant amount of FDI in the fiscal years to come.

Indo-Nepal Trade and Investment: An Analysis

India and Nepal have traditionally shared a unique relationship of friendship and economic cooperation. The relationship is characterised by an open and people-friendly border and is built on shared historical, cultural, linguistic and ethnic links between people residing in India and Nepal. With Nepal being a priority under India ‘Neighborhood First’ policy, strengthening the economic relationship holds immense significance and potential for both the countries. While the political relations between India and Nepal have been extensively studied, there is not much literature that explores the economic relationship between the two nations. This is an important issue to study, as India is Nepal’s largest export market, the biggest source of its imports, the top investor of foreign capital stock and among the largest donors of foreign aid. India also provides Nepal transit facility through its territory to access seaports for trading with the rest of the world. Given this, the main objective of this article is to suggest policy measures, which can increase bilateral trade and investment between India and Nepal. The article analyses the bilateral trade patterns and estimates the maximum additional trade potential. A wide range of issues of importance pertaining to bilateral trade, including tariffs, levy of an agricultural reform fee, under utilisation of the tariff rate quota, non-tariff measures, issues related to Rules of Origin (ROO) and physical barriers to cross-border movement of goods are discussed. The trends and changing sectoral composition of India’s investment in Nepal and barriers and opportunities for Indian investment in Nepal are also analysed. The article concludes by charting a way forward for bolstering economic cooperation between the two countries by listing down recommendations for enhancing trade, addressing non-tariff barriers, upgrading infrastructure to improve connectivity and enhancing Indian FDI in Nepal. JEL Classification: F10, F13, F15, F50, F53, P45

Evaluation of institutional grounding for Russian investments to basic industries of Nepal

This article is developed to understand the Russian investment in Nepal. Since these days due to the western section it is necessary for Russia to expand its economic relations to others continent and Asia is a best part to expand its investment. As there are some countries already tie with Russia in economic connection from South Asia like India, Pakistan but with Nepal and Russia had more on diplomatic relation. Thus it is very good choice to look and increase for economic relation for Russia with Nepal. The author has highlighted institution determinant of Foreign Direct Investments (FDI) to attract investment in Nepal because these days the political stability has become better in Nepal. The author also found the industries to invest in Nepal for Russia however there are some investment existed already by Russia. The author has recommended to the investors to invest in some specific industries without any hesitation as Nepal is facilitation for investment attraction and also its institution condition is becoming better.

Contribution of Foreign Direct Investment in Nepal

The purpose of this paper is to analyze the foreign direct investment status and environment in Nepal. There is significant contribution of foreign investment in economic development of developing countries like Nepal. Foreign investment attraction in a country like Nepal increases the foreign capital and technology transfer. Since 1990s inflow of foreign direct investment (FDI) has been increasing in Nepal due to the adoption of liberal economic policy by the government of Nepal. The Foreign Investment Technology Transfer Act (FITTA) has made better foreign investment environment in Nepal. This paper examines and analyses the contribution of FDI in Nepal. For the analysis, simple linear regression model has been applied to measure the impact of FDI on GDP and employment. Because FDI inflow has been recorded after 1990s, the impact of FDI has been analyzed in this paper over the period of 1990/91-2018/19. This study finds a positive impact of FDI on GDP and other macro variables.

Trans-Himalayan power corridors: Infrastructural politics and China's Belt and Road Initiative in Nepal

This article examines the shifting dimensions of Chinese infrastructural aid in Nepal, focusing on the politics of anticipation and enunciation that shape Nepali perceptions of Chinese-facilitated development and negotiations concerning Beijing's Belt and Road Initiative (BRI). Drawing from ethnographic research focused on sites of ongoing and planned infrastructure development in Nepal's two northern districts of Rasuwa and Gorkha, we analyze the uncertain remaking of these areas into trans-Himalayan power corridors. Our examination reveals the gamut of transitions, opportunities, reorientations, and expectations that the BRI and other forms of Chinese investment evoke in Nepal, showing how politics articulate infrastructures, and vice versa. After reviewing the historical context of Nepal-China relations, our empirical analysis begins in late 2014 when China became the single largest source of foreign direct investment in Nepal, continues through several rounds of negotiations about the BRI and other forms of Chinese infrastructural investment and aid, and concludes with a review of significant Nepal-China agreements at the Second Belt and Road Forum, held in Beijing in April 2019. Tacking between remote construction sites, scenes of diplomatic debate, borderland villages, investment summits, and speculative media coverage, we demonstrate how the Belt and Road Initiative is differently enacted and co-constructed by a variety of Nepali and Chinese actors who interpret, reimagine, and rhetorically appropriate the BRI within their own narrations of future possibility.

Returns to Potato Research Investment in Nepal

Agricultural research plays a significant role in increment in productivity and contributes to food security. Very few studies on the impact of public research spending on different sectors and commodities in Nepal has been documented. This study was designed to estimate the adoption lags of improved potato varieties and benefits generated by potato improvement research in Nepal. More specifically, the study answers two basic questions: (i) whether investment in potato research is justifiable? and (ii) how long is it taking to replace old improved varieties? We took public annual potato research investments of Nepal from the Fiscal year 2001 to 2017 from Nepal Agricultural Research Council (NARC). The household survey was carried out to estimate the potato varieties coverage in Nepal in 2017. Other secondary data were sourced from the Ministry of Finance, Ministry of Agricultural and Livestock Development, FAO stat, Nepal Rastra Bank and NARC to complement the analysis. We have used a simple economic framework to estimate the benefits generated from agricultural research. The estimated benefit and cost streams were used to calculate Benefit-Cost Ratio (BCR) and Net Present Value (NPV). Results showed that the majority of the potato researchers had done research related to crop husbandry (seed production and crop managements); while the limited number of researchers had specialized in breeding activities. The annual growth rate of potato productivity was 214.49 kg per annum per ha which had increased at the rate of 1.76 percent per annum compound growth rate. The results revealed that the average weighted age of improved potato varieties was 21.83 years and each NPR. investment on potato research has given 508 NPR. and NPR. 13760 million NPV at a 12 percent discount factor during the last 17 years. Similarly, the contribution of potato research to GDP and AGDP was found 0.323% and 0.989% respectively. Therefore, future investment and focus should be concentrated on potato research and scaling up activities, and reducing variety adoption lag to obtain additional benefits from potato research investment.