Monday, 24 November 2014

8 Challenges of Nepalese Economic Development

By: Bikal Dhungel  

1) How to end the massive problem of under-nutrition: This is an evidence that better nutrition = better health = better human development = economic development. Poor nutrition = poor health = poverty trap = poverty. 47% of children in Nepal are stunted, mal-nutrition is alarmingly high. Nutritional deficiency is not only the problem of today, it has a long term impact. Deficiency is connected to reduced cognitive abilities which will cause in poor results in school and this finally cause fewer opportunities in the future regarding income. The very first step of economic policy should be to end this trap. The question is now how to end this trap. To end this trap, you should find information about who are struggling with nutrition. Substantial amount of time should be spent on distribution policy. Learning from other countries are vital. Countries with similar level of development have distributed Food Ration Card for the basic nutrition. Then there are policies to reduce food waste. There are agricultural policies which are targeted to food production in the form of small entrepreneurship. In some cases, there are also free distribution of energy biscuits financed by aid money. Economically saying, even if the country provides subsidized foods, it will be less costly because if not, this person cannot contribute to the welfare of a nation given his/her cognitive deficiency. It might also be that the country need to pay for his/her treatment in the future. So, prevention should be focused instead of treatment. 

2) How to create an affordable healthcare system for all: 80% of Hospital are located in urban areas whereas the majority of people live in rural area. The unavailability of healthcare system due to any reason has caused poor health condition of rural inhabitants. In urban area, hospitals are over-crowded and unhygienic especially the government ones and it will not be wrong to say that hospitals are not only the place to treat the disease but also a place to catch infection. The Health insurance market is not available for the large majority. But if it were there, people would be willing to pay a portion of their income because if you are unlucky and something happen, it might cost you a huge fortune in most of the cases. People are forced to sell their properties to pay that cost. So, health based poverty traps are visible everywhere. The economic impact of this can be huge. For this reason, most of the development countries have compulsory health insurance scheme for their citizens and those in the lower level of income group will be subsidized. This is however easily said than done. So, the division of task should be there. Governmental policy should be focused on prevention through public health campaigns, educational programs, environmental standards , public policy etc and the private sector can concentrate on health insurance scheme and to bear the costs of treatment, there should be a good deal between the actors about who should take how much of the share. Where government fails, private sector emerges and they might not always act on the interest of the public but governmental regulation should offset this. Still, this is not something one can design in one of two days or even years, but it is possible in the long term.

3) How to fill up the education gap to reach 0% illiteracy: The 65% literacy rate Nepal has today is not a satisfying number. 35% illiteracy is enough for all sorts of problems regarding health, culture and political instability. Illiterate people have higher tendency to believe in superstitions that can be harmful. In rural areas, people for example trust the traditional healers instead of doctors. Illiterate people are less likely to send their children to school even if the schools are available. Illiterate people are more likely to discriminate based on gender or caste. Illiterate people can easily be manipulated to achieve political interests for example the use to violence that the Maoists have done in the past. Illiteracy is one of the reason of poor health etc. Providing educational infra-structures including the qualified teachers and school materials are challenges that are especially high in rural areas. In urban areas, this is not a problem but still, the quality of education should attract the focus of experts. In government schools, the rate of failure in SLC exams are extremely high, close to 90%. This is a pure weakness of management and the quality of teachers. First of all, providing at least a secondary education to everybody is a key to further development. Education is related to better health, entrepreneurship and a peaceful society where any form of discrimination, or superstitious beliefs rarely exist. So, the challenge to fill up this gap should be thought thoroughly.

4) How to solve the Infra-structural Dilemma: Have a look at a Google map of Nepal, you will discover that almost half of the country, the northern side are only mountains where people cannot live. So, Nepal is actually much smaller than the total area of 147,181 sq km. About two thirds of the remaining area is of high hills where the population density is sparse. Only about 20% area, the southern plains, houses most of the people. The hills and rivers possess a real challenge to build infrastructures like roads and bridges there. Even if there is an access of road, due to the lower density of population, most of them cannot be fully utilized. So, the recommendation here is that, costly infrastructures should not be built blindly. There should be calculations, how many people live in the area and how much would it cost to install basic infrastructure there like paved roads, schools, hospitals etc and if that cost of higher than to bring these people to other areas where settlements could be built, it should choose the latter. It will be equally unjust for other tax payers to spend huge amount to build roads that can be helpful for few people. Economic calculations must be there. Development alone is not enough, it should be just, it should be sustainable and it should be in a position to be used.

5) How to achieve self-sustaining agricultural system: In a globalized world, no country is fully self sustaining and only few can achieve prosperity by itself. But if it could self-sustain in terms of foods, it is better because it is in lower risk of starvation in case of war. The Common Agricultural Policy ( CAP ) of the European Union is based in this principle. Even though it will cost them cheaper to import foods, they are subsidizing their farmers so that in case of emergency, they don't have any kind of food shortages. For Nepal, being a small country, it is highly dependent on neighbouring countries for almost all kind of foods. This has created some serious problems sometimes. The landslide for example blocks the road and food supply will be stopped causing the food prices in the cities to skyrocket. If there are environmental problems in importing countries for example heat waves, it will cause a massive rise in prices. Moreover, the importing country can also use the food as a political instrument to put pressure. All these are not good for Nepal. So, self-sustaining food system is necessary. It is again possible by small scale farming in the first place, that will also reduce food price and makes less dependent on foreign countries. But this alone cannot sustain us. Food production should slowly grow, it should be industrialized. Small scale farming cannot feed the nation, only if the absolute majority of the people are farmers. This is not true in today's scenario. The service sector is rising and most of the educated people choose other sectors than farming. The process was similar in rich countries. When they transform from poor to middle income to rich countries, the size of agricultural sector decreases. It is same everywhere. Only 70 years ago, Agricultural sector comprised about 20% of German economy, today it is less than 1%. The productivity growth of these countries can also be attributed to the switch from agricultural to industrial sector. Roughly saying, about 0.5% people can feed the whole nation today due to their agricultural productivity supported by machines and industrialization. So, for development and food security, it is necessary to be self sustaining. But a good news is that, Nepal is moving towards the right path. If it continues remain in this path, someday, it can sustain itself.

6) How to ensure urban sustainability and rural development: Urban sustainability here means how to create livable cities. Kathmandu is not a livable city. The air pollution there cause deaths of thousands of people yearly due to respiratory diseases. The water system has failed. Most part of the city should buy water for daily consumption. There is no good sanitation system. Waste management is another example of failure. Every types of wastes are lying everywhere giving a safe heaven for diseases to spread. All these have caused increasing cases of diarrhea, typhoid and other health problems that then possess burdens on hospitals that were built when the population of the city was half a million which house today more than three million. Decentralization would stop this process from increasing further. Better housing plans, better town planning, road planning, water and sanitation system, environmental standards for vehicles, waste management system etc will solve the problems mentioned above. These are also easy things to do. It does not require a superior technology. It only require minimal capital, rules and the power to enforce these rules.

7) How to create an entrepreneurial society: All above mentioned policies will not sustain in the lack of entrepreneurial society. To keep life going, entrepreneurship is vital. Humans are actually entrepreneurial animal by nature because we should survive. Most of the people living in the whole world do not have their own lands where they can grow foods for themselves. They have to sell their skills in order to earn a living. So, after achieving basic requirement, humans should involve in creation, create something with value and exchange this value. This will move their life further. No country in the world has achieved prosperity without entrepreneurship. This is however, the result of learning, ideas, information and a good environment. The job the government is to create an environment and the rest is the task of individual itself.

8) How to eradicate all forms of discrimination: Discrimination is bad for growth and bad for sustainable peace. Achieving high standards of living does not necessarily mean that there will be no discrimination. There is discrimination in rich America, there is discrimination in Europe and in Japan, Australia, Singapore and actually everywhere. Women in the western world earn 20% less in average than men who do the same job. People are still discriminated in some places due to their beliefs, skin colour, sexual orientation or something else. Some places have dropped these sorts of discrimination to minimal level by working on awareness programs, education etc but the way to that point was everything else than easy. Nepal is a country of over 100 languages, many castes, many religion, rich, poor, middle, lower middle, upper middle, people with different political views, radical, liberal. Nepal is fire. People are fighting for every little things, from which colour the flag should be to which street should be named what. Powerful few can do anything they wish whereas the poor are struggling for basic rights. There are all forms of discrimination everywhere. Policy makers have no clue where to start. It is like trying to keep a milk in a pot with 1000 holes. It is important to solve these issues but going through the sequence of above policies will make the work done with few resources. Education is vital here but not enough. The main thing is that, it should not give rise to violent conflict. Once you light a fire based on these issues, it will leave a deadly scar that will remain for a long long time.   

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