1. Define economic growth.

Why is the economic growth of

Nepal faltering in the recent years?

Economic growth is an increase in the amount of goods and services

produced per head of the population over a period of time. It is also a
continuous rise in the level of Gross Domestic Product and per capita
GDP. Economic growth is required to improve the standard of living
people.

The economic growth of Nepal faltering in the recent years aftermath

the Earthquake 2015 and unofficial blockade from India with estimates
reaching to as low as 0.77 %. Some of the reasons for it are listed
below:

a. The devastating Earthquake 2015 is one of the main reasons for

slower economic growth where every sector of economy: Agriculture,
industry and infrastructure got affected. Many people died along with
damage of historical places and damage of households and roads
leading to loss of productivity.

b. The unofficial blockade from India disrupted supply chain creating

shortage of daily basic goods and shortage of raw materials for
business. Various infrastructural project stopped after the blockade.

c. Lack of effective policy measures created hurdle for effective

implementation of economic and developmental projects and
programs.

d. Lack of political instability also accounted for faltering economic

growth.
 2. In your opinion, what is the appropriate strategy to utilize the
remittance received by the country?

Remittances are one of the important sources of capital for the

country. Not only remittances help at individual level but if utilized
properly in productive sector it can boost economic development.
Some of the strategies to utilize the remittance received by country
are as follows:

 Encouraging personal saving

 Influencing people to invest in agricultural sector or in small
business

In order to channel remittances in productive areas for economic

growth, the government should offer incentive to increase remittance
flows. Tax incentives like rebates or concession may attract remittances

3. In order to increase the rate of growth of the economy, export

should be increased. Justify this statement.

Export is the main driver of economic development of a nation. Higher

the export, higher will be the GNP and hence increase in economic
growth of a nation. It is also known that exports are seen as an engine
of economic and social development because of their ability to
influence economic growth and poverty reduction.

Let’s explore the relationship between export and economic growth.

 Thus, increase in export leads to following factors ultimately leading to
increase in growth opportunities for an economy.

 Creation of job opportunities

 Increase in consumer demand
 Increase in productivity

4. Which area and policies should be focused to achieve inclusive

growth of the country?

 Inclusive growth means sustainable economic growth that creates

employment opportunities and helps in reducing poverty.The
following area are the primal focus to achieve inclusive growth of a
country:

 Forging competitiveness ( in agriculture)

 Harnessing export potential (Hydro power and tourism)
 Leveraging regional economy ( Reaping benefit of being in
between India and China)

The following policies must be developed and implemented in the

above areas in order to achieve and sustain economic growth:

 Increasing export of High value product

 Making Nepal as strategic location for manufacturing
components of MNCs
 Creating income-earning opportunities for the poor
 Increase investment in hydro power sector as it has the
commercial potential in Asian market and Nepal has the adequate
resources to do so.
 Improving institutional mechanism

5. What kind of macroeconomic policy is suitable for Nepalese

economy to develop the country? Why?

In view of prosperity with equity as a principle agenda of the nation,

probably a mix of sound counter-cyclical policies and policies of
enlarging and changing government and private investment patterns
aimed at diversifying production structures is more urgent in the
context of Nepal. The exchange rates should also be revised on timely
basis because of change in the global business environment in wider
spectrum. Nepal should find a way of translating its integration with
the global economy into higher growth and sustainable development
by carrying out complementary policies to enhance supply elasticity
and offset some of the adverse outcomes and by cooperative action in
partnership with its South Asian neighbors. However, these should be
supplemented by offsetting policies to promote greater equity and
poverty reduction.

Above all, the macroeconomic policy should focus on harnessing

export potential of Nepal.

A revised and new integrated macroeconomic policy is needed for

Nepal to increase export, and enhance economic growth.