The Development of Nepal

np_large_locator.gifbasic information

30.5 million
HDI rank
Life expectancy
Expected years of schooling
Mean years of schooling
GNI per capita*
*constant 2005 PPP $
Source: UNDP (2011)


Nepal is a landlocked country in South Asia with enormous diversity. There are numerous variations in ethnicity, caste, language and religion. It is one of the poorest country in the world with some 80% of its population living in rural areas (UN 2011). It has been struggling with development and political uncertainty since the end of civil war.

Recent Political History


Nepal’s politics were characterized by instability and violence for the last two decades.

In 1996, the Communist Party of Nepal (Maoist) began a violent insurgency to transform the country into a People’s Republic. It led to the Civil War in which more than 12,000 people was killed (BBC 2012). In 2006, the war ended with a peace process of accommodation between the existing political parties and the Maoists.

Political instability continues to plague Nepal. There have been 4 prime ministers from 3 different parties since 2008; each rarely lasts much longer than a year. A key part of the peace deal is to agree on a new constitution for the democratic republic. However, the peace process is stalled since no consensus can be secured in the divided parliamentary (The Economist 2011).

In May 2012, the parliament missed its deadline to write a new constitution for the fourth time since its creation in 2008. The Prime Minister Bhattari dissolved parliament and called elections for November (The New York Times 2012). A new constitution is yet to be completed and consented.

Economic Development

Though being one of the poorest country, Nepal has made considerable progress in economic development. Growth in GDP has averaged 4% per year between 1990 and 2009 while poverty has declined by 39%. The improvement suggests that Nepal will achieve the Millennium Development Goal to halve poverty by 2015 (UN 2011).

Geographic environment constraints Nepal’s development to some extent. The mountainous terrain and the monsoon make the building of roads and other infrastructure difficult and expensive. A majority of rural areas are left out in the process of development.

Screen shot 2012-11-10 at 10.29.36 PM.png
(Word Bank 2011)

The service sector contributes to half of its GDP while manufacturing and industry only contribute to 15 percent of GDP and continued poor performance (Word Bank 2011). ‘Nepal is at an important historical juncture’(UN 2011), however, the economic and social development have been adversely affected by political uncertainty. Real GDP growth is 3.5 percent in 2011, below the 5 percent average achieved during 2007-2010 (Word Bank 2011).

Social Development


According to the annual Human Development Index, Nepal is the country that has made the greatest strides in improving human development since 1980 (The Economist 2010).

The United Nations Development Report ranks Nepal 157th out of 187 countries in 2011, in the low human development category. The development is significant when the comparison is temporal rather than spacial. Between 1980 and 2011, Nepal’s GNI per capita increased by about 98%; life expectancy at birth increased by 20.6 years. Nepal’s HDI value increased 89% over 3 decades (UNDP 2011).

Nevertheless, the development is uneven and exclusive with some geographic and social groups benefit much more than others. Lower-caste people, rural communities, women and children are left on the periphery of development.

A country analysis report by UN accesses the vulnerability of disadvantaged groups and notes the underlying causes: caste and ethnic discrimination, patriarchal values, lack of education, inequitable resource distribution, low representation in political process, weak institutional capacity, lack of rural infrastructure and conflict (UN 2011). These factors pose threats to the Nepal’s overall development.