Economic Policy for Nepal

By: Bikal Dhungel

Nepal lack a feasible economic policy. The major political parties plan development projects according to their own ideology upon the pressure from their party members. There is no clear way forward. If there is one, it changes soon after another party takes over the government. There is no general consensus on what they want to perform and how. We can also say that there are only few people with economic knowledge. The aim of this article is to highlight something that will probably be good for Nepal. However, it is just an opinion with back up of evidences. A policy that work in one country might not work in another but this can be taken as a case study. So, the policies are:

1. Disciplined Fiscal Policy: This means, spending according to the capacity without placing burdens to future generation. Our mistakes should not place a burden to our children. Government can borrow now to pay back later but there should be a logical time frame and the payment should be held in periodic manner. Apart from infra-structural development, health and education, there can be no other longer term investment. So, only if it is really needed, long term borrowing should be allowed.
   
2. Tax Reform: In the present situation, only about 4% of Nepalese pay the tax. Most of them dont because they do not earn enough to pay, but others because simply they can avoid it. Due to lack of good monitoring system, it is difficult to detect such cases. Probably information technology can help. Other countries have already started digital payment system where it is easy to see electrical transaction and make people pay taxes. So, the first point is to bring people who are liable for tax into tax circle and second policy is to discuss how we want to organize it. Either we want a progressive taxes or we want a lump sump. I will not write my personal opinion here because it hasn't been studied enough yet which tax system is better for Nepal based on Nepalese context.
   
3. Practical interest rate and exchange rate mechanisms: Interest rate should be determined by the market. Exchange rate must be pegged with either Indian currency, as in the present or with Chinese Yuan. It is important to peg because otherwise the Nepalese currency will be too weak, it will devalue and will be worthless in international markets. As we dont have a competitive export sector, a devalued currency will reduce the purchasing power of Nepalese. It will make import more expensive and due to this, Nepalese market will see fewer foreign goods. Since Nepal trade more with India, pegging with IC is good. Moreover, India is also growing to be second largest economy in the world, it will lift up Nepalese currency until India wants to keep the peg. Still, it should not be fixed as permanent. There should be consultations periodically.
   
4. Tactical Trade Liberalization: Trade Liberalization basically means eliminating restrictions on trade or making export and import less bureaucratic or reducing taxes for imports. Internationally there is mixed evidence about trade liberalization. In some countries it has helped but in some it was a disaster. So, Nepal should reject 'one size fits all' policy and try to consider the local realities. Once Nepal develops small scale agri businesses, the government can place some form of restriction on vegetable imports to give a chance to small local industries to build up competitive advantage. But this should be limited in time. Government should simply look what kind of industries are growing, how much time they need to build up and how they can be lifted up. Such industries need protection in the initial phase for a certain time frame. The import of high-tech goods like advanced machinery should be tax free because they are efficient and have other positive externalities. It can be medical devices, machines used for production, automobiles that run with renewable energy etc. For export, Nepal can do less because it depends on the policy of receiving country as well. Export sector need support. It is a way to accumulate hard currencies and it creates job at home. Only regarding energy, it should be discussed how much to export because if Nepal itself is falling short of energy, it is not good to export it abroad even if the foreigners are paying more for this.
   
5. Privatization of State Firms with some exception: The state firms like Nepal Oil Corporation, Water Corporation, Airlines Corporation are among the most inefficient ones in country. A recent study showed, when 'Royal Nepal Airlines' had 19 airplanes, it had about 190 employees. Today, with only few airplanes, there are over one thousand employees, most of whom got job through political recruitment. This will cause a rise in personnel costs and the firm cannot generate profit. Moreover, the management also does not have incentive to run the firm efficiently. Property of a state means, nobody feels responsible for the actions. Who looses at last are the tax payers. Privatization is a key of efficient management. In advanced countries, except the military, railway, and few other sectors, no others will be state owned. But there are exceptions. In Nepal context, privatization seems to be a factor guaranteeing efficiency.
   
6. Reforming Property Rights and Patent Law: Without the security of one's property, the owners have a tendency to emigrate if it is a physical property or they have to bear costs of protecting it themselves by hiring security guards. Such actions are economically damaging. No one profits from this. Property Right should also be guaranteed for non physical goods like music, writings etc. Only if people are sure to get the fruit of their invention, they will involve in creating things. If I know that my song will be copied by a second person anyway, why should I spend time in it ? Intellectual property rights and physical property rights are determining factors of invention. In Nepal's context, especially the Maoist guerrillas have frequently claimed others properties as their, mostly with violent manners and this caused people to run away from place to place. The job of the state should be to protect its citizens property.
   
7. Inter-sectoral Reforms: As Economy is closely related with other areas like education and health, a disastrous health and education policy will impact the economy directly. When the work force are not educated well, they cannot participate fully in the economy. When the workforce is not healthy, they cannot participate fully. So, for a quality workforce, it is the job of a government to provide them with education and vocational training. Private sector can help in things like on the job training but the biggest role is of government. Also a social security system should be established. It should not default on financial ground because social security will have indirect effects and the positive externalities can be seen only in the future. Western European countries that introduced social security system in the mid 19^th century were much poorer than Nepal today. So, just financial constraints cannot to used to justify for not introducing it.
   
8. Building a capable state to implement its policy: Nepal does not lack good laws and regulations but the problem is in implementation and enforcement. Development projects frequently gets disrupted sometimes labours calling for unnecessary demands, sometimes the locals asking for higher compensation than planned and sometimes based on political grounds. Implementation of law also means in social sectors. There are fantastic anti-discrimination laws which bans caste discrimination or any other in the form of religion or class but they were never implemented properly. Without proper enforcement, better policies are useless. 
9. Sustainable Development: Development is not just achieving economic growth. Economic growth can also lead to inequality and political instability. Sustainable development means inclusive development where nobody is discriminated. SD also means development without compromising the future of our children which means our economic growth should not place burdens on environment so that our children have to face problems connected to it. So, supporting and encouraging Green Industries is important for sustainable growth. 

Human Capital in 21st Century

By: Bikal Dhungel 

The Encyclopaedia Britannica defines Human Capital as follows: “intangible collective resources possessed by individuals and groups within a given population. These resources include all the knowledge, talents, skills, abilities, experience, intelligence, training, judgement, and wisdom possessed individually and collectively, the cumulative total of which represents a form of wealth available to nations and organizations to accomplish their goals “. Simplified, it means your capabilities through which you earn money. The human capital can be categorized into three main sources: health, education and nutrition because they are the origin of abilities and skills.

Human Capital in the form of Health can lead to many other aspects. Healthier people can learn better and efficient. When you are not healthy, your focus goes on your health, you spend your time to cure your health and you miss the time to acquire skills. They say health is wealth because better health would generate better income. Health is then related to Nutrition. When you supply your body with better nutrition with vitamins and minerals, you are likely to be healthier. When we fall short of nutrition, when better nutrition is not available for whatever reason, it will impede our health and as a result you will be unable to participate in economic life and fail to generate income. The vivid picture of some poorest countries gives us feeling how this actually is. Mal-Nutrition is a terrible problem which leads to poor health, worse learning ability and the poor will continue to remain in poverty trap. One can see this by indicators like Life Expectancy. Countries like Central African Republic have life expectancy of less than 40 whereas Japan has more than double this number. As Life expectancy is related to better health, better healthcare system, better nutrition, it is an indicator of wealth. That is why, countries with highest life expectancy are also the richest. Their richness in turn help them to maintain better health because they can afford better foods, healthcare etc. I have written a separate article about it called “Wealth is Health “in the blog.

Second factor that is related to Human Capital is education. Education means you are acquiring skills, so that you can later use your skills to earn an income. Without education, the wage rate will be very low as you can only employ your raw labour and with every additional year of education, your wage increases. The returns to human capital can also be measured by looking at people’s wages. Data shows that in both developing and developed countries, school enrollment is increasing and few countries have already achieved a 100% enrollment rate. Especially the education for girls have helped to reduce the wage gap, to empower the women and have gave them more freedom and the power of self-determination. No time in history were women more empowered than today. Still, we should not forget that there are countless countries where women are still kept backward based on cultural and religious grounds. The education of today is also not like in the past. We have employed modern day technologies in the curriculum. A child cannot learn from copies and books alone. Today, multimedia technologies like Computers, Projectors and other advanced tools are used to educate people. Also the total number of years of education has increased. People no more leave school with 16. They can go further to the University for higher education and highly specialize in a field. University enrollment in high and middle income countries has crossed the 40% threshold. Also in developing countries it is increasing.

So, these three things, Nutrition, Health and Education are the prime drivers of Human Capital. But the question is, is it enough ? Are there other factors that play a role so that people can achieve their best ? Indeed, there are. To start a discussion, we have to go bit further than human capital itself.

The problem is not knowing what drives human capital, but by ensuring how we can employ these factors. Large number of people especially in developing countries do not have any access to healthcare. If healthcare is available, it is only within the reach of wealthy. Poor are deprived of it. Though we have achieved a lot in health issues, the way forward is more complex and still billions of talented minds just go wasted. The similar story goes for education. We have increased the number of school enrollment but just knowing how to read and write is not enough, there should be specialized knowledge to make living from that. To provide education, there are many financial constraints, there is less political will to make health and education policy accountable, health infra-structures are missing and many other problems remain. As long as the bottlenecks are not resolved, the likelihood of technological advances in the future will be less. We can see the characteristics of countries that score highest in Human Capital Index. These countries are mostly northern and western European countries with some small east Asian nations like Singapore, Hong Kong and South Korea. What they have is 1) Universal education system that is compulsory, 2) Free education at any level, 3) Universal Healthcare System, 4) Fantastic social security system 5) Just tax system to finance public expenditures 6) Training and Specialization schemes for those who choose not to enter the university. They are basic policies but the impacts are huge. Private firms in the economy train the workforce through Trainee Schemes and Internships. People specialize in tiny things and when these skills are accumulated and combined, great technologies come out. After everyone has basic education, they must not posses knowledge about everything. In the western world at least, little specialization has driven economic growth. For example, the tribes in Amazon Rain Forest are among the people with most skills. They can survive without cloths in the jungle, can hunt their foods, know how to deal with wild animals, and how to make foods in any situation. These people have probably more skills than a young person in London who would starve to death if he goes to Amazon Rain Forest. The cloths he is wearing was not made by him, neither the computer he uses but somebody in the society he lives knows how to make it. How to sew cloths and how to make computers, and they are produced in mass scale. This allows him not to care how to do things rather concentrate on what he can do better. 

The whole computer was not invented by one single person. Visual techniques was invented by one person, another invented microchips, another one wiring, yet another one the mouse and the rest. Combined, it makes a computer. Hence, the source of success is the network and cooperation between these little inventors. The more inventors there are, and the more they cooperate, there will be better finished products. The problem of developing countries is that there are too few inventors. There might be somebody who has an idea how to make wires, but nobody who knows how to connect it with other appliances. So, this fails to generate a result.

In the field of economics, Adam Smith first published his book ' An inquiry to the Wealth of Nations ' in 1776. In subsequent years, his theory was used by others to find other things. For example Milton Friedman contributed a lot about monetary economics. Another one spent his life on institutions, another on ideas, another on development economics, another on economic psychology etc. Combining all these ideas, we understand human decision making processes better. We also understand the dynamics of poverty and development better. The findings by thousands of other researchers have added in our knowledge which helps us to understand things better. So we have a large stock of knowledge. Once we know this, this becomes our human capital and we try to contribute our part in it. The privilege we enjoy today can be attributed to many such people who spent time to give us skills, knowledge and know hows. The challenges of 21^st century is only how to disseminate these knowledge, how to spread these knowledge to everybody so that we all profit from it. The world bank and other public institutions have continually campaigned for knowledge as a common good and this is why the research data and other world bank publications has also been made available to the public since recently. The role of national governments should be to provide the infrastructure for learning apart from basic education. It is cost efficient to provide information technology for free which empowers the citizen in many ways. They should also focus on global learning based on best practices instead of presenting narrow nationalistic views. However, everything cannot be applied one to one in any situation. Global practices might need to be refined, modified to better suit in local conditions. Governments should also focus on relaxing the bottlenecks of development in cultural and traditional areas. We see that culture is in fact one of the hindrances of development and it is very difficult and politically unpopular to change cultural values. But there must be a start.

To conclude everything, human capital in 21^st century is not mere education, nutrition and health, it is specialized knowledge, networks of people, it is learning infrastructures, it is a global network etc and to make this happen, institutional changes, infra-structural supports, better policies and incentives to learn and specialize is needed.

Understanding the Pattern of Economic Growth

By: Bikal Dhungel

The general question of why some countries are rich and others are poor is the matter of how growth was achieved in some places and not in others. In other articles I have answered this question with a broader perspective where the roles of economic, social and cultural aspects were dealt. This article only deals with the growth pattern, the economic growth itself and this is not fully my idea. I summarize the theories of other scholars from previous decades to answer the question and leave it to the readers to analyse it themselves.

The father of the theory of economic growth is Robert Solow, a Nobel Prize winning Economist who published a paper in 1956 called ‘A Contribution to the theory of Economic Growth’. Years following, he continually contributed to the growth theory and for his work, got a Nobel Prize in 1987. His model is called The Solow Model. Models represent the complex reality in a simplest way possible mostly with figures and some mathematics. Solow Model is also the mathematical representation of real life economics, only in a simpler form.

The Solow Model consist of two functions, production function and a capital accumulation function. Capital simply means tools or knowledge that generate income. For example the sewing machine is a capital because it can be used to sew cloths. Similarly, the skill of a doctor is also a capital, but it is called human capital because the doctor uses her skill to generate income. The production function of a Solow Model describes how inputs are combined to produce output. As an example, to produce a Pencil, we need wood, we need lid, we need rubber and we need colours to colour the pencil. With these inputs, we produce a output, in this case, the Pencil. To produce this output, we combined Capital and Labour. How many percentage of capital was used and how many percentage of labour was used varies in individual cases. Some goods are labour intensive so they need more labour whereas others are capital intensive and need more capital and less labour. The firm pays wages to the labour and rent to the capital. It is also logical, with more capital, a firm can produce more output, however in a diminishing rate.

But the question is, how to accumulate capital ? Well, in reality, when a firm makes some profit, it invests a part of its income to acquire new machines, better technology and can even invests in research and technology. It can even borrow to invest in better technology hoping for higher profit in the future. With time, the capital a firm is using will rust, it needs reparations or in economical term, it depreciates. So, a constant upgrading is necessary. Considering a world of only workers and firms, the workers get wages by working in a firm and they consume a part of their income and save the rest. They save in a bank and the firm borrow from the bank to invest in better technology. So, indirectly, the same workers are lending a part of their income to the firm. So, this process continues, which we call running an economy. What we can conclude from this over simplified story is, firms must continue investing and workers must continue working and the availability of capital is important. How much capital per worker is available in the economy is what explains the difference between the worker in one country from the other. The US has more capital per worker than India. That is why the productivity of an American worker is also higher than the productivity of the Indian worker.

Solow Model tells that the economy will continue growing until the amount of capital per worker needed is equal to the real capital growth, which is called Steady State, and after that the economy cannot grow. It can only grow if there is new technology. So, it concludes that every country should or will reach the steady state sooner or later, but to achieve economic growth after that, there should be technological development. Then the growth rate equals to the growth of technology. Comparing this to the real world, let us take an example of China. Since 1979, China is growing rapidly. It built factories, production lines, developed its agriculture, service sector etc. It has employed available capital to produce more and more. it is bringing rural farmers to work in industries and consequently, China is growing at a rate of 8% on average. Now, China achieved a certain living standard, most of its workforce are employed and growth has slowed. Now growth rate is lower. It will soon reach 0%. 0% growth means, next year China will be as rich as today, and not richer. But, if somebody develop a technology which is able to produce more goods efficiently, growth rate will be equal to that. So, growth will be equal to technological growth. This answers why the US is richer than China though it had only 1 or 2 % economic growth in the last one hundred year. Because this is the growth rate of technology and sustaining a growth rate of 1-2% for such a long time makes you rich. So, first answer of our initial question of why some countries are rich and why others are poor is because they have higher labour capital ratio, meaning more capital per worker than other countries which are poor and they had a constant technological development.

But the story is far more complex than it was presented in this model. We have assumed a fixed number of workers and firms and all workers have same skills and the firm remains there for always. The reality is often different. Workers grow because population grow. With the amount of technology remaining the same but the number of people increasing, the rate of capital per worker declines. From this theory we can say that, population growth is seen as bad for the economy because the per capita income will be decreased. However, it should also be considered that more people are likely to create more ideas which in turn can help the economy. But in this model, it is assumed that countries that have higher population growth tend to be poorer and countries with lower population growth tend to be richer. Second factor which was also not considered was the skills of workers. All workers were considered to have equal amount of labour. However, in reality, people have different level of human capital. Some are highly educated hence high productive while others are not. Some are more healthy and can work longer while others cannot. We also considered a firm to be constantly there. In reality, firms might or might not be there for a long time because times change, technology change, demands and rules change. Imagine firms that produced Cassette players before. They used to be popular because people listened to cassette player. Today people don’t buy any cassette players because there are better technologies. So, Firms that produced Cassette Player disappeared and new firms arrived that produced smartphones.

So, more considerations within the Solow Model was done in consequent studies that Solow himself and other researchers did later. One of them is the Romer Model , done by Paul Romer and others from Gregory Mankiw and company who included things like human capital in Solow Model to enrich our understanding about the patterns of economic growth. To repeat, the process of economic growth is, firms acquire capital, then the workers acquire skills to use that capital in a best possible way, they learn better while they work, which we call 'learning by doing', they increase productivity, then the capital rust, the firm will upgrade capital and the workers continue working. When they reach the steady state, there should be new technology and the growth rate will be equal to the growth of technology. During this process, when the population growth is higher than the growth of capital or technology, the country gets poorer and when the population declines, more capital will be available to the workers, so, in per capita terms, they become richer. What rich countries did to sustain growth is, they supplied better qualified labour by investing in their education and health. A firm cannot do this by itself, so the government step in. This means, a responsible government that fulfilled its duty to educate its people, provide security and so on helped the government to grow. The social infra-structure which was provided and better economic policies, better coordination between the government and private firms helped rich countries grow. poor countries in contrast have failed to provide quality education to its citizens, healthcare is absent and there is lack of security, as a result the firms do not invest. Moreover, the patents and property rights law do not exist everywhere. There are also frequent disturbances to the firms in the form of political pressure individual acts like asking for money. In this case, firms have incentive to relocate to another country or to shut down. There can also be political groups like the leftists who tag the firms as violators of social justice whose aim is to exploit the society to generate private profits. This all results in low investment, which is correlated to lower employment and then poverty.  

Big Push of Aid or No Thanks

By: Bikal Dhungel

It is not necessary to define Development Aid again, it has been defined in previous articles but before I graduate to the topic, I think it is useful to define some other terms. Aid has different forms. For example, when a donor country says, its giving a grant to a poor country, it can be either in the form of cash or any goods and the receiving country dont require to repay it. Loans however are different. In international development cooperation, we often hear about concessional loans. That means, loans with concession or discount. There will be a very low interest rate or no interest rate at all. Then there is a big term called ODA, Official Development Assistance which is also called 'Foreign Aid' in general. When you read about 'Foreign Aid' or 'Official Development Assistance', both mean the same. ODA can also be either bilateral or multilateral. Bilateral Aid means the cooperation between two countries. Like when the US gives aid to India, its bilateral. Multilateral Aid means the aid given by multi-lateral institution which belongs to many countries. For example the World Health Organisation, the United Nations, International Monetary Fund and the World Bank are multilateral institutions. When these institutions give aid, it is not given by one particular country but by the institution as a whole.

The story of Aid is big and the volume of aid is big too. In 2013, total ODA reached 135 billion US$. The biggest donors were the United States, United Kingdom, Germany, Japan and France. These five countries gave about 85 billion in total. In terms of percentage of GDP, Norway, Sweden, Luxembourg, Denmark and the United Kingdom top the list. Only these countries have fulfilled the MDG where they promised to give at least 0.7% of their GDP as aid. On the receivers list, the top 10 receivers are Agfhanistan, Democratic Republic of Congo, Vietnam, Ethiopia, Pakistan, Tanzania, India, Turkey, Palestine and Kenya. One can easily notice from this list that top aid receivers are not really the poorest. Turkey is not poor, it has a per capita income of $20,000 based on Purchasing Power Parity. India is poor but it has launched a satellite to space recently worth 7 billion dollars. 

Aid is given for many reason, it can be political, economical, strategical or cultural. Evidence shows that, political reasons are the strongest. Countries give aid to maintain political influence which might be necessary for themselves. It can be for economical, for example to support certain firms or sectors. China is a famous example of economic aid. When it gives aid to neighbouring countries to build highways, the contractor should be a Chinese firm, even Chinese workers go there and work and even the raw materials will be exported from China. By this way, it also helped the donor. Sometimes it is also to extract resources from a particular sector. Congo is rich in resources but there are no good infrastructure to extract the resources. So, China builds a road to a rural area so that resources can be taken from there to elsewhere. Finally, the aim of Aid is to reduce poverty. Of course not all countries are interested in reducing poverty. There are many motivations behind, which is often not easy to know. As a consequence, aid has failed to impact positively in most countries. This means, aid did not reduce poverty or contributed to economic development. In some cases, it fueled more corruption. Therefore, there are two groups of experts who are outspoken critics of aid, and a big supports. Both groups have published large number of scholarly journals and books.

When we come to the original meaning of Development Aid, to contribute to the economic development of under developed countries. Diplomatically, they are called developing countries today, even though they are not actually developing. Aid has worked in some places and in others, it has been a catastrophe. It has worked in countries that followed good economic policy and where there is an accountable government. Where there is political instability, armed conflict, vulnerable economic situation, and bad governance indicators, aid effectiveness is lower. Let us consider that aid will be implemented well. But then, will it generate growth ? Is it enough to change a country economically ? The answer is short, No. Aid will not bring big changes even there is 100% effectiveness. Aid consist of less than 1% of receivers GDP in most cases. This will barely bring any change. A country that is lagging behind in health, education, infrastructure etc, pouring aid in small projects or in one sector alone will fail to bring big change. The aid will simply disappear, it will be a drop in an ocean. If we want to bring change, aid is required in all sectors, especially in health, education and infrastructure. This should be at least for two decades because the ones who get support will be pushed back to poverty once the funding ends. To put them in a situation to generate income, they need support until they are able to use their human capital to generate income. The major problem of developing countries today are: 1) the healthcare system is underfunded, so, the health of nation is poor. With poor health and sickness, people cannot use their labour and talents in full potential. 2) The education system is underfunded or inefficient, both in terms of quality teaching and the lack of proper infrastructure. 3) the infra-structure is too poor. Situation in rural areas are more worse. As the largest portion of people live in rural areas, lack of infrastructure hit them hard. Hence, support is needed in all three sectors and not in a single one. 

We often see that a certain aid organisation is building one school in a rural setting. This sounds good but again the sustainability is the question. Is it enough ? With school building alone, without qualified teacher , will it be able to reduce poverty ? The answer is no. There are other stories we hear about a donor giving money to poor people in a poor place but in reality, such things help very little. If the goal is to bring people out of poverty trap and help them to live a quality life for longer term, such aid should be there for a long time. Aid should not only build one school but first provide people enough calory, then help them get education until the intermediate level, then there should be healthcare facilities and infrastructure which should help them to be entrepreneurs. Only then it will be sustainable. If the funding comes from aid, this aid should be there for a long time. Superstars like the U2 singer Bono, Angelina Jolie and prominent economists like Jeffrey Sachs are all right in their argument. Small amount of aid will not help much. Small aid is there since four decades but it has failed to generate any results in poorest countries. So, even experiments are being done by Jeffrey Sachs in his so called Millennium Villages where they give aid to people in every aspects. Either it will work or not, time will show but it makes sense. Even if it fails to bring change in a macro scale, a limited number of people will be helped efficiently. This argument is made from the side of receiving countries. But the donor is not a single country or organisation. They are wide range of countries, with different motives of aid, with different political and economical views and to coordinate aid is everything but simple. However, if there is a better coordination, they can concentrate on particular countries or regions in a year and first finish the job there before moving to other regions. This might not be easy in practice but if aid is failing to bring any change anyway, why cant it be a good thing to try ? Before they pour other hundreds of billions in poor countries, there should be a Plan B to make aid really work. So, A big push of aid can be a viable option.  

Are Developing Countries Too Poor To Be Green ?

By: Bikal Dhungel

This Essay 'too poor to be green' was a part of an assignment I wrote for the University. I decided to post it here because this is very important in development issue and a matter that has been discussed intensely. I hope it will help the readers to think about the issue from both perspectives. 

Introduction:

What is 'Being Green' ? It can include, using clean forms of energy, recycling waste, consuming organic and local products, to some extent preferring fair trade products and other environmentally friendly behaviors.

What is 'Being Poor' ? - In this context Least Developed Countries (LDCs) and in Developed Countries context, those who earn less than 60% of average income.

Economic Growth and Environmental Protection is akin to the relation between inflation and unemployment, demonstrated by Philipps Curve (Leonard-1989,p4). The conflict between Development Economists and Environmentalists is based on either LDCs should adopt 'grow and clean-up later' (the growth pattern of developed countries) or 'leap frog to sustainability' approach avoiding environmental damage during economic growth. However, this does not mean that poor people or LDCs do not care about the environment. 'Poor are highly dependent on land and natural resources hence they have incentive to be careful environmental managers' (Alier 2005). The aim of this essay is to discuss the environmentalism of the poor in micro (personal) and macro (country) level. Hence, the research questions are, 'How are the poor effected by Green Policies?','Are the poor anti-green or too poor to be green?'. After a general discussion, I will use two countries, Germany and Nepal for a case analysis and finally conclude the essay.

Discussion:

The Millennium Development Goals (MDG) lists 8 challenges according to the order of their importance. A huge financial injection is required to fulfill these goals. This can only be achieved through economic growth sustainably. Economic Growth Models, like the Lewis Growth Model however says that the process of growth evolves from primary sector followed by secondary and manufacturing before graduating to tertiary or service sector implying the negative externality on environment. If developing countries are to follow this pattern of growth, high emission of Green House Gases (GHG) through production and industrialisation is obvious. However, the Environmental Kuznets Curve argues that as GDP rises, environmental degradation will follow and when the GDP reach a certain point, it leads to reduction in environmental damage. Empirically, there are mixed results. The contrary argument of this is the cost-effectiveness of preventive measures. LDCs are in the middle of this dilemma, either to embrace economic growth or environment. The two case studies will present the difficulties of being green in a poor and rich country in both micro and macro level.

Nepal:

Roughly 75% of Nepalese use firewood as a main source of energy especially for cooking (WHO,2010). From 1980-2010 population increased from 15 to 27 million (CBS,2011) .The major driver of this growth is that children are seen as old age insurance for parents (Nugent-1985). During the same time, over one quarter of the forest was lost (MoF,2013). Percentage of people living with less than a dollar a day and those below poverty line is respectively 20% and 25.5%. 1500 youths leave daily to Middle East for employment. Mal-nutrition remains at 20% (WB,2011) and the story goes further. These figures can be generalised to other LDCs to some extent. Need to use more farmlands is greater than the consequences of environmental disasters caused by deforestation as food is needed today whereas environmental consequences will come tomorrow. Health risks due to indoor pollution generated by firewood while cooking are being neglected based on unavailability of other forms of energy and the inability to afford if there is one, especially for the poor. Consequently, a kitchen is the largest killer in Nepal through lower respiratory infections (IMHE,2010). Health and environmental risks are known but the lack of choice leaves with no action to resolve this.

Solar Energy is gaining popularity but it is limited to rich few. The average cost of installing a 2kwh Photovoltaic costs Rupees 105,000 (approx.$1050), 1.413 times of per capita income. Comparing to the UK, it means that it would cost ~39,000 Pounds to install considering per capita income of 28,000 Pounds (IMF,2013). Concerning the wastes, they are disposed in the river due to the lack of technological know-how to recycle or manage it properly and the financial means to acquire these technologies. Most municipalities either dump wastes or put in other public places disregarding the environment or public health. Developing countries like Nepal face financial constraints to act on such issues and the alternatives. Relying on subsistence farming and animal husbandry for daily survival, Nepal is also the home of 7.2 million cattle, a major emitter of Methane. Still, it is not practical not to have cattle due to its immense importance as a major nutrients supplier and the dung which could be used as fertilizers. Other major issue is about The Green Revolution, use of genetically modified technologies and pesticides. There is no doubt that this will cause negative externalities in human health and the environment, but Green Revolution has improved the health status of 32-42 million children (Evenson,Gollin 2003) and saved the world to avoid the disaster predicted by Malthus. As the 'Essay on the principle of Population' mentions, population growth is a serious issue, particularly in LDCs where most growth is centered but the dilemma of 'old-age security' makes it harder to stop this.

Germany:

The German government has decided to shut down all nuclear power plants by 2022. Massive investments are being made in renewable energies. However, this is not without problems. The electricity bills are increasing and the term 'Energy Poverty' has come into existence. A report by Federal Network Agency (2013) mentions that electricity was cut in over 300,000 households due to unpaid bills and 'millions' are facing difficulties to pay. Another study by the Center of German Economic Research claims that the poor pay over-proportionally for energy transition than the rich. The poorest 10% of the population would pay 1.3% of their income whereas the richest 10% only bear 0.2%. Moreover, big companies with strong lobby were also successful in getting exemption from the increased energy costs due to the competition they face internationally, whereas the small ones could not.

The poor also eat unhealthy and cheap fast foods that were produced causing more GHG than organic foods. The financial scarcity limits their choice.

So, from here it could be concluded that poor in both rich and poor countries are facing difficulties to go green or to be green consumers and the term 'too poor to be green' (Martinez-Alier,1995) to some extent is true. However, are the poor anti-green, how is their willingness to be green? Evidences give mixed picture. Martinada et al found that the Willingness To Pay (WTP) for legally logged woods are higher than illegal among the poor in Guatemala. Owusu and Anifori (2013) found that WTP for organic fruits and vegetables are higher in Kumasi, Ghana. Valerien et al found that 78% of consumers had WTP more for organic and environmentally friendly products. In a 41 country survey, Dorsch (2011) found that there is a wide support for environmental protection. Yang et al (2012) finds that the Chinese customers have in average 22% more WTP for Fair Trade products. However, Ivanova and Tranter finds that, in a 27 high income country data, support for environmental protection has decreased from 1993 to 2000. Comparing other issues with environment, a survey conducted by ISSP from 1993 to 2010 in 33 countries shows that environment is of minor importance in comparison to Economy, Health and Education. Only 4.7% of the respondents mention Environment as the most important issue.

Conclusion

The case study of Nepal shows the reason why it is difficult for poor countries to go green. No doubt that protecting environment is necessary, but preventing human death and suffering due to poverty should be prioritized. Problems of developing countries, namely ending mal-nutrition, reducing the prevalence of diseases, universal education and healthcare, infrastructures can only be realised by economic growth. Without old-age security mechanisms, poor will continue having more children putting more pressure on agriculture, food supply and environment. Without the availability of suitable technology, poor will continue using firewood. Without waste management system or recycling technology, poor will continue dumping wastes in the river. Without better ways to sustain, poor will continue keeping the cattle. There is no evidence that any country that achieved economic prosperity without causing any harm to the environment. At the same time, Environmental Kuznets Curve hypothesis has been proved in many countries. The case study of Germany was presented to show that even poor in developed countries are facing difficulties to go green. However, many things could be done in personal level by behavioral change for example switching off the lights when nobody is in the room, using cycle instead of cars if possible, using energy efficient light bulbs etc. Finally, evidences show that poor are not less willing to go green. Poor do care about the environment. When there is technology transfer, financial ability, infrastructure, poor are also green but the problem they are facing today is not due to their choice rather due to the lack of choice.

So, a recommendation for a country like Germany can be that the poor get more support from the authorities concerning the use of green energy and get financial support. Focus should be on behavioral changes in terms of food choices and a progressive cost bearing scheme would be socially just. For a country like Nepal, focus should be on building micro hydro power plants in rural areas and better management of waste disposal in the cities and education in behavioral changes. In both countries, going green can have a high initial cost but the long term effect of this is positive. So, choices have to be made how they can address this issue and convince the people to play their role as well.

Creators of the World

By: Bikal Dhungel

Most of us who are below 30 or 35 were born in a world of plenty. Many devices we have today, we take for granted. For us, thats the way it is. Ask the children of cities where the milk comes from, they might answer ' From the Refrigerator '. Actually, they dont need to know, things are just available to them. Similarly, children of today also cannot think that all the devices we have at home, from television to computers to mobile phones, micro-oven and many others made a long way to arrive in the present. When we go out of the kitchen, we are filled with technology. We see that when we travel in buses, trains, aeroplanes, when we go to the doctor, there are X-ray machines, devices that check the status of human body and the super markets that are full with machines, the electricity, and many many things we see. Only few take time to think the evolution of these devices and technologies. What is true is, they have made our life easier. They have also challenged the traditions. My grandmother used to be angry when we didnt eat all foods because then she had to throw away as it was not good to store. Today we can keep the foods in refrigerator. Thanks to such technologies, our life is easier, we live longer, we live healthier and we live in a more productive way. There is not only technological progress but also in social sciences or arts. We have better ways to raise kids, we have better ways to govern and in every other fields, thanks to research and technology, things are much better than in the past. To this phenomenon, we call progress.

So, how was this progress possible ? It is because of the ideas of people. It was the idea that created the world. However, it was not the idea of everybody. Nearly all of human beings do not involve in the creation of ideas but the very few who do, shaped the world we live in. This idea may be in the form of Philosophy, Arts, Science or anything else. The number of people who shaped the world, or the great thinkers, doers, can be counted. For example, the person or people who discovered fire, who discovered agriculture and wheel diverted the way humans have lived for thousands of years. The great philosophers like Buddha, Jesus Christ or Mohammad organised people and took them to a certain direction. After the 15^th century, the people who had enlightening ideas shaped the world in a new way. Then the early giants of industrialisation yet changed the world again. Since then, it is continually being changed. Recently, this change is so rapid that if you sleep for 20 years, you will be lost when you wake up. Still, this change was shaped by handfull of people whom we can count. Other billions of humans are busy in basic thing, to lead life and depart. While they live, they are interested in two things, bread and sex. But it is the creative inventions that first came out as ideas, that made our world as it is today.

Ideas are necessary for economic growth which in turn improves life standard. Ideas are also non rivalrous, which means that, it cannot be excluded for somebody. Everybody are better off from this. For example the discovery of Smartphones. Everyone who can afford, can buy it. Similarly, the ones who discovered Refrigirator, Printing Press, Television, Radio, Telephone, Computer, Steam Engine, Polio Vaccine, Rice Cooker, Bicycle, Helicopter, Anasthesia, Traffic Lights, Medicine, Calculus, MP3 player, Food packaging, Air Conditioning, Electricity, Vaccume Cleaner and many many others and yet other discoveries and contribution to the discoveries are the people who shaped our world, who created our world. Every year, the Nobel Committee honours such creative minds in six main sectors, Physics, Chemistry, Physiology, Literature, Economics and Peace. These people have created the world. Their creation might be either material or non-material but both of them make our life better. This story can go one but here I would like to put a full stop. The idea behind is, there are creative minds who have helped the world to prosper. It is their ideas we have to honour. Still, we should also agree that despite such a great leap towards progress, almost half of the world is still far from technology. So, the challenge is to find out how can we make the technologies global ? How can we make sure that lives of everybody is better due to creative ideas ? Here are some recommendations that is based on evidences. If governments embrace these ideas, they are likely to take the fruits of better technology.

The first is openness. As a country, you have to be open to the good ideas from abroad. This should be in the form of Free Trade and liberal economic policy which include liberal investment policy. With liberal investment policy, you are allowing foreign countries to invest in your country. They bring technology, then your citizens should acquire know-how. See China, once it opened the border for trade, foreign companies like Mercedes, Volkswagon and many others rushed to invest in China. They built production lines and factories. The Chinese learnt from this, and now they are building their own car industries. Second is a global orientation in education system. There are vast research going on in educational sector. How to teach better, how to create a better learning environment, how to make efficient teaching and learning etc. It is important that countries should learn from lessons from abroad. Not only in school and university education system, the culture of learning should be adopted. One factor which shows this is the total number of books that were translated in the local language. This shows the openness to foreign ideas. In the Arab world, very few books will be translated every year. In Europe for example, although there are tiny countries with a language spoken by only few million people, far more books will be translated into local language than in the whole Arab world. Along with books, also the articles in scientific journals are a source of ideas from foreign countries. The government has a big role to play in this matter. Instead of preaching narrow minded nationalistic views, it is important to take a global stance. One prominent example is Singapore. The man who made singapore , Lee Kuan Yew, a British educated politician who is regarded as the father of Singapore adopted a global education system. He had politicians who had more nationalistic stances but he angered such people and implemented an international system which proved to be a big success.

Third, there are things that countries can do domestically. For example, a society that is not entrepreneurial will never achieve economic growth. Life is a business. It is buying and selling things. We buy what we need, like foods, cloths, devices, education we need and we sell what we have. It can be our skill as a doctor or lawyer, or if we are a pure business person, we might sell things like vegetables we grow or any other thing. If every person in the society is in business, that means buying things they want and selling things they have, there will be no unemployment. Everybody will create wealth and this is called growth or progress. But if some of us just wait at home looking for somebody who will give us a job, we might end up doing nothing in whole life. Then we also dont progress. Entrepreneurial spirit is very important. Why the Jews are so successful is because they are traders. They dont look for opportunities, they create opportunities. Fourth, the role of government is to create an environment where trade is possible in a fair way. Government should also give incentive to people to create and discover. One tool for this is Intellectual Property Rights, in the form of Copyright or Patent. It simply means securing the rights of a person who discovered something. When you discover something, you should be able to make profit out of it. And to secure your invention, the rule of patent restricts someone else to copy your idea. If it would be possible to copy your idea, then why would you invest so much time in researching and discovering ? That is why, the role of a government is to secure your rights to make profit by your invention. It should also protect your physical property. The final point I would mention is large population. With a population of 10 million, there is a chance of having few more Einstein than with a population of 1 million. So, concerning ideas and discoveries, having a greater population is positive. More people more ideas, fewer people fewer ideas. However, it should also be considered that higher population is connected to other aspects like the negative impact on environment etc. Secondly, higher population is only good for creating ideas if they are educated and do not have a dire life conditions. If a country is too poor where there is massive poverty, hunger, lack of education, lack of freedom, having more people can be devastating.

To conclude everything. We are enjoying the highest living standard today among all our ancestors. It was made possible by the ideas of creative people in all areas, science or social science or something else. The idea was not necessarily a big idea but was also an accumulation of small ideas that created big result at last. Ideas also create more ideas and we rely on older ideas to create new ideas. So does science. Newton once said, ' I could only invent with my good ideas because I was sitting on the shoulders of giants '. Not all these giants invented something personally, but they contributed to other discoveries. Not all invention is a result of a lone freak who spent his life in a room thinking of better ways. Most inventions were a result of team work, some at once and some in the course of hundreds of years. Leibniz gave us Calculus and calculus is used in variety of subjects today. Similar example could be seen elsewhere. But the point is, where YOU want to belong, either in a group of people who are just interested in bread and sex or the person who sacrifices worldly enjoyments to discover something and contribute to make the world a little bit better or you would find a middle way in between.  

Nature, Economic Growth and the Dutch Disease

By: Bikal Dhungel

In a previous article, we talked about the impact of economic growth on environment. That was about how the increase in human welfare in terms of wealth has affected the environment we live in. In this article I will take nature, or the environment as a factor that contributes to economic growth. Nature here means either the natural resources or the geography. So, the first question arises, how does geography determine economic growth ? What is the role of geography in economic growth ?

First of all let us find the differences between the environment and geography of countries or region that are rich and those that are poor. Taking an example of Europe, 90% countries have an access to the sea. The temperature is favourable for agriculture. There is enough rainfall. There is no complex geography. There are many navigable rivers. Source of energy, coal, is in plenty and so on. These characteristics play important role to drive economic growth and to sustain it. Having an access to the sea is probably the most important among these characteristics. It was empirically proved that countries with an access to sea involve in international trade in a greater degree and trade is important for economic growth. For this reason, places that are rich are mostly near the sea. Scientific papers on economic growth have frequently mentioned that proximity to the sea explains why there was a rapid economic progress. A paper by Sachs, Gallup and Mallinger mentions an important information that only 17.4% of world's landmass is located within 100 km from an ocean but 50% of world population live there and 68% of total world GDP is produced there. In the contrary, many of the poorest countries in the world do not have access to the sea or at least not in a condition to make it a port. Access to the sea is correlated with higher GDP. Moreover, having an access to the sea also reduces the transportation cost of goods, and this again boost consumption and contribute to growth. In the US and Western Europe for example average transportation cost for goods account less than 5% whereas in sub-Saharan Africa and south Asia, it goes well beyond 20%. Another factor that plays a role within the geography is climate. There are 12 climate zones in the world. Three of them, tropical, sub-tropical and temperate are where most countries are located. Climate is important because humans are by nature tropical creatures. Only after the development of clothing and better housing, we were able to settle in colder regions in the last thousands of years. Similarly, humans also could not survive in hot regions. Climate matters because our agriculture depends on it and we all know that largest part of the world still rely on subsistence farming and the origin of all human foods goes back to agriculture. In poorest regions, sub-Saharan Africa and south Asia, about 60% agriculture comprises about 60% of all employment. So, if there is advances in agricultural productivity due to better technology, growth will occur but in the absence, they will continue lagging behind. Agricultural productivity is higher in western Europe and the US, both due to technological advances and better soil quality. Empirical evidences shows that farther the country lies from the equator, richer it is. Equator is an imaginary line drawn exactly in the middle of north and south pole that divides northern and southern hemisphere. With an exception of Singapore, farther the country lies from the equator, more developed it is. However, if we consider agricultural outputs in countries that lie far from the equator, it cannot be concluded that the quality of soil or the temperature alone explains the higher output. Other factors like the amount of land available per worker, technology, human capital and other privileges might play a role as well. There is a famous paper by Gallup in this matter. He concluded that land in wet tropics produces 27% less than land in the wet temperate zone, land in dry tropics produced 31% less than land in the wet temperate zone, and dry temperate zone produced 15% less than land in the wet temperate zone. So, such variabilities in productivity explains why some regions are poor and why some are rich.

Countries and regions also differ with the prevalence of diseases. The rate of spread of disease is different in ice climates than in the tropics. The tropics is also the home of most human diseases, one of them being Malaria, which kills almost a million people in a year and infects other millions. Diseases have negative impact in human lives. Those with disease cannot participate in economic life, they perform worse in the school and are likely to remain in poverty trap. Having a member in a family with a disease will impact the whole family indirectly. So, if a large portion of the population is not healthy or at risk, this will have a huge effect on economic development. This is why countries with high mortality due to Malaria are poorer in comparison with countries without. Being prone to diseases cause poverty and poverty in turn makes people prone to diseases. In the case of Malaria, it also also called the disease of the poor as it is exclusively present in poor tropical countries. The Malaria Ecology Index of the WHO shows that Spain and India are equal in the index but 0% of Spanish are at risk of Malaria whereas 70% of Indians are. The same figure shows that, the higher the index, poorer you are. But here again, having a high index does not automatically mean that you are a poor country. Availability of medical technologies and a good healthcare system will reduce the risk as in the case of Spain. But we can conclude from here that Climate and disease are related and disease and economic development are related. So, climate and development are also related.

Some climates are simply unfavourable for humans unless there is a technology that will kill out the disadvantage. For example, in the middle east, it is impossible to work during the day. The temperature goes beyond 45 degree. But still, large human settlements are being built in UAE, Qatar and other countries. It is possible only because of air condition in the houses. Since the development of air-condition, places that were unlivable before became new homes of humans today. The US has many such places like Las Vegas which were unlivable once but thanks to the technology, it is no more like that. Similarly, the heating system in cold areas allow people to avoid any difficulties due to cold winters. Hence, climate plays an important role in economic growth. Along with the points mentioned above, climate is a determining factor about our capacity to live in a certain place, how long we can work , how favourable is the situation and many more. When climate does not possess constraints, development is possible, otherwise it is difficult.

Let us talk about the natural resources where the term 'Dutch Disease' come to use. The term Dutch Disease was attributed to the Netherlands when natural gas field was discovered there in 1960s. A substantial part of the workforce worked in gas fields and that lead to the decline of industrial sector which was successful at that time. As time went on, Gas became scarce and the labour was not needed. But until then the manufacturing sector had already contracted and people had fewer skills to return to work in production. So, they were worse off and the manufacturing sector suffered due to lower skills of workers and this phenomenon is called Dutch Disease. This can be used in other context when a country for example discovers resources like Gas or Oil or any other natural resources, then a large portion of its population work in that sector. Slowly the resource become scarce or finish but the people have no other skill to do something else. About the connection between natural resource and economic development, I have already written an article called 'Resources: good or bad for poor countries'. But here, what I focus is, natural resource is very important in economic development. If you have an availability of resources you need for production, your reliance on foreign countries will be mitigated. Depending on foreign countries for sensitive resources can put you in danger if there is a shortfall due to political reason. One example of such shortfall was the Oil Crisis in the seventies when oil exporting nations stopped supplying oil to western Europe and the US for their support of Israel. This crisis was called the 'Oil Embargo' and it caused an economic recession to some extent. Ensuring the flow of resources is very important in development. Development itself is resource intensive and the origin of resources is the nature itself.

However, countries that are rich in natural resources are not necessarily well developed countries. Some of them achieved growth based on natural resources like Norway but others got trapped into a deep political conflict mainly due to the availability of natural resources, like the Democratic Republic of Congo or South Sudan. On the other hand, countries that do not posses any useful natural resources are among the most developed countries, examples are Belgium, Singapore or Switzerland. This shows that the role of government plays an important role in ensuring the better use of resources. Norway, with an accountable government was successful in creating an environment so that every citizen profit from the resources whereas countries like Congo, Sudan and Venezuela got trapped into an ethnic violence and preferential politics that ignored people belonging to other clans or ethnicity which resulted in large scale conflict. Countries that do not have any natural resources focused on human capital which in the long term gave a path to technological advances and created competitive advantages, as a result of which they lead highest living standards today.

Hence, having natural resources is neither good nor bad. Only if you can better use this, you are likely to generate economic growth. We should also keep in mind that no matter how advance we are in technological development, the origin of this is the nature itself. So, anything that destroys the nature can hit back in the long term. A successful country makes an intelligent use of natural resources but does not rely fully on it to generate income, otherwise there will be a danger of Dutch Disease as in the Netherlands and elsewhere. Additionally, we conclude that, geographical factors like the access to the sea or navigable rivers that lead to the sea, the temperature of the place, the amount of rainfall, availability of other natural resources, prevalence of diseases and other natural factors played and plays an important role to achieve economic growth and development.

Wealth is Health

By: Bikal Dhungel

This article does not explain the general importance of health rather how is health and wealth related to development. 'Health is Wealth' is a common expression that is well known these days but 'Wealth is Health' has been true as well.

Health is wealth because healthier people can work hard. Better health is also correlated with better performance in school or college. Healthy students perform better in average than unhealthy student who frequently miss the classes. As educational performance is related to wealth, those who are good in school also earn more money later in life. Healthier people are also more productive. The benefit of good health is obvious.

However, wealth is also health. With more money, one can afford better healthcare or better medicine. Wealthy people can afford better nutrition, they can eat healthy and balanced diet. Poor do not have this privilege. There are enough evidence of this. When we look at the life expectancy at birth, rich countries top the table. Japan and other industrialized countries have more than 80 whereas some least developed countries have a life expectancy of less than 45 years. It is because they have poor healthcare because they cannot afford, and they have poor diet. The situation in Europe before they became rich was not different. Life expectancy before 1700 was less than 40 in all over the world. Only in the last 200 years, it doubled. Due to more calory intake and better healthcare technologies, people live longer. For example, an average British had a daily calory intake of about 3000 per day in 1800. In 1980, it was 3700. When South Korea, Singapore, Taiwan, China etc became rich, their calory intake per day increased as well. In rich developed countries, data shows that, they have better health indicators. In poor countries however, it looks gloomy. They have a large disease burden, about 80% of total. Malnutrition is rampant and the number of stunted children are also high. Consequently, educational performance is also poor and this is the cause of lower level of economic development.

Public Health System is also better in rich countries. There is better management, one can see more focus on prevention rather than treatment. Prevention measures are cost-effective and they place lower burden on health system. This is quite opposite in poor countries. People are reluctant to spend on prevention measures but later end up paying a lot for costly treatment. Taking an example of Vaccines, poor people do not make use of this and often procrastinate. Once they are caught by diseases, they have no other option than to bear the cost of treatment. It takes a mere 30 cents per year to buy an amount of chlorine that is needed to purify water people drink for a year but most people either cannot afford or do not do it or the chlorine bleaches are simply not available, or they do not know it. In rich countries however, vaccinations are compulsory. You have no other option but to vaccinate and if you dont, schools do not take the admission of your children. But even if you dont vaccinate, you are less likely to be affected because everybody else are vaccinated. Regarding clean water, we in rich countries do not need to think about it because the water supply company does this for us. 

Rich people tend to buy healthy, organic food whereas the poor mostly eat junk foods when we see the case within developed countries. Coming back to the general argument that wealth is health, rich countries can also afford to do wide research in medical sector. We have made a gigantic progress in terms of health technologies. There are so many technologies available that even health professionals are not aware of this as the pace of technological progress is too fast. Moreover, all of the top ten pharmaceuticals in the world come from rich countries. They can afford to do researches. Normally, the data shows, to launch one medicine in the market, it takes 10-15 years in average for pharma companies and costs about a billion dollar. Developing countries cannot afford this. So they have to rely on generic drugs. Moreover, rich countries are also able to train costly health professionals like the doctors with quality education. Poor countries proportionally train fewer doctors, though this is changing since the emergence of china.

The point here is, when you are wealthy, you can afford many things in health sector. As a country, you can finance public health campaigns, you can afford better treatment, you can afford better technologies, better research and other things related to health. So, wealth is one most important cause of better health. Health is wealth and wealth is health.  

Healthcare during Conflicts and War

By: Bikal Dhungel

The aim of this article is to highlight the health sector during violent conflicts like that in Nepal from 1996-2006. Also the case of Nepal will be taken as a case study but this can be generalised to other places of least developed countries.

In 1977, three writers, Blaikie, Cameron and Seddon wrote a book called 'Nepal in Crisis' which signaled some prophetic crisis coming in Nepal. They have analysed the present scenario and predicted the future based on that scenario. Nepal was terribly poor country that time. It was a dictatorship where the government restricted the freedom of expression. There was very high inequality. Poverty was rampant. Access to healthcare and education was very low. A large majority of people relied on subsistence farming. There were only handful of infra-structures, like highways, bridges, hospitals and schools etc. In such a scenario, sooner or later, there will be a violent conflict.

Even though Nepal had a democratic transition, poverty and inequality remained. Also caste based discrimination remained. Finally in 1996, conflict began and lasted until 2006 with over 16,000 deaths, thousands of widows, orphans, handicaps and hundreds of thousands of internally and internationally displaced. That caused a dire consequences on health sector. Over one thousand sub health posts were destroyed directly by the guerrillas. So, the people had nowhere to go when they needed healthcare. The health workers ran away fearing their lives. The danger of attacks also cause other health workers to flee from rural areas. During that time, new born children could not get any vaccinations, so they are prone to many diseases. The maternal mortality rate increased due to lack of health workers in times of birth. As roads were blocked and bridges were damaged, medical supplies could not be brought to rural areas. Even basic things like Paracetamols and Anti-biotics were lacking in rural areas. There was no electricity as the power lines were bombed, hence, the medicines could not be stored well. Those who died during the war, not because of bombs but because of the lack of medicine, because of the lack of healthcare will not be taken into statistics but if so, in Nepal's case, far many people died due to the war.

The leading Red Cross surgeon Marco Baldan puts, 'One of the first victims of war is the healthcare system itself '. There will be more demand of healthcare during the war due to injuries. Sickness is a frequent process in human life, it doesnt take a break when there are no doctors. In the absence of health workers, even a minor disease can take life. The Red Cross Society mentions that health workers, who go to conflict areas to save others lives are under threat themselves. Many health workers have died till date. Reports says that dozens of health workers died during the Maoist led Civil War in Nepal and there were many cases of kidnappings, harassment, prosecution by both Maoist and government side. Health awareness program could not be performed in such a situation and public health campaigns were limited in the cities. Those who were not vaccinated for example not only put their own lives in risk but also the lives of others. When millions were displaced, they are also the transmitters of diseases like HIV when they move from one place to another.

When the mass emigrate to urban areas, they put additional pressure to the health sectors there. For example the hospitals in Kathmandu only have capacity for certain number of people but once they are overwhelmed by injured ones from rural areas, the health system suffer anyway but also the people from urban area suffer due to long waiting time, lack of hospital bed, non-timely supply of medicines etc. If there were no disturbances in health sector, the health of Nepalese nation would have been much better today. Apart from destruction, the health and development budget had to be diverted towards buying new weapons causing another long term impact. Economists calculated that, the opportunity cost of the conflict has been about 4% of Nepal's GDP directly. Indirectly, it will go higher. Disruptions in trade, loss in revenues from tourism, lost investment, security costs, the costs of the guerrilla fighters education, those who lost their parents and were driven to poverty, all these things can not be measured.

So, the cost of a war is not just a direct cost but also others connected to it which can never be calculated precisely. If governments, guerrilla leaders think of these consequences before they go to war, they would at least think of alternative ways to solve the problem. Moreover, the experience from around the world is enough to think about it. Trying to solve problems with military way is fundamentally wrong. The reconciliation time can go on for decades if it does not destroy the country fully. Along with other countries, Nepal will be on the list of places that can give a lesson to the rest of the world but also to itself, for future leaders of any particular party. Big scale conflict should be avoided at any cost.  

Concentrate on Urban Development

By: Bikal Dhungel 

Most of the changes in the pattern of human settlement was seen after the beginning of 20^th century. The World War I and II disrupted the process and again, a new order was formed. World Population grew massively since then, more than doubled. So, more place was required to accommodate new citizens. In the year 1955, only 30% of world population lived in urban areas and the majority 70% lived in rural areas. In the year 1975, 37% lived in urban areas and 63% in rural areas. In 2005, the share of rural area has decreased to 52%. However, in developing countries, still, over 75% people live in rural areas. But this is going to change. The UN predicts that in the year 2050, about 65% in developing countries and as much as 90% people in developed countries will be living in urban area. It does not necessarily mean that people from rural areas will come to urban areas. It means that urban population will increase rapidly that they will have created giant cities with big skyscrapers and will have lower space per person whereas the rural areas will also experience an increase, however in lower proportion. The world population is thought to stabilize between 9 to 14 billion.

So, what does this mean for policy makers ? It means, its time to do something. Rapid urbanization is already on its way. It is time for sustainable city planning, to think how they can accommodate so many people who should also enjoy at least the basic life standards. Otherwise there will be chaos. Governments should start planning now, how to deal with the problem of mass urbanization. The following points give a very basic introduction of what they can do:

• Health Sector: Healthcare is a very important thing. When the population of the city continue rising but the capacity of hospitals and clinics remains the same, health of citizens will suffer. Policy makers should think how they can expand the healthcare for future needs. Of course there will be more clinics available but health sector is more than a clinic. Hospital waste management system, a teaching place and other sub-sectors within it needs a long term thought. A mere increase in the number of bed will not guarantee quality health. The increased need of doctors, nurses, health workers etc should be dealt together with the education sector.
• Educational institutions: When people immigrate, their family and children follow. Children needs schools and the schools should have a capacity to integrate them. Universities, vocational training centers, all need to consider the demands of new citizen.
• Waste Management systems: Growing population will also generate waste. However the city collects its waste and where it dumps, it should be able to cope with more waste. New landfills need to be operated, more waste collectors are needed and a functioning recycling systems should be built. Otherwise people will simply throw the garbage on the street which will cause many forms of pollution. The most sustainable way to manage waste in a big city is the build a good recycling system. If wastes are not recycled, there will be a frequent need of land to dump wastes. Waste differentiation policies should come, like a separate collector for plastics, papers, electrical waste or bio waste. A failure will directly impact human health and will cause pressure in health sector.
• Water and Sanitation facilities: More people require more water pipe supplies. Once it is built, it will be costly and difficult to dig the ground again to build a new line. There might be new buildings or road and might not be possible to repair when needed. So, there should be a standard route that will ensure an effective reconstruction when more people live in that area than before.
• Telecommunication: Like water lines, telecommunication companies should be prepared for larger number of customers in the future. While constructing electric wires, they should think about the possible constructions in the future. So, working together with the government to plan this sustainable for the future will be cost-effective for them and will cause fewer disturbances due to construction and maintenance works.
• Residential areas: When population increase, it is obvious that they need place to stay. Plans should be there where to build new residencies, either to expand the city or build sky-scrapers. There can be a genuine policy of housing and industrial areas. Housing and Green Gardens could be placed in one area whereas industries can be located outside the city which will avoid direct industrial pollution.
• Free spaces: Free space is vital. A park, greenery or a sports place where people can walk, talk, play or involve in other types of interaction is necessary. The central park in New York is an example where, despite a busy schedule, you can relax in the park. Such parks should be in various places.
• Cycle ways: Also due to current climate change, cycle is gaining importance. Many western European cities have already built Cycle Highways. It lowers pollution, is good for health and will relax the city transport.
• Public transportation system: ' A rich country is not where even the poor drive cars, it is where even the rich use public transportation ' said somebody. An electric tram can replace 200 cars. Buses are equally good, financially and environmentally. Building a train network that can be expanded upon demand is very necessary. There should also be strict regulations on the use of private vehicles in city areas.

The world has globalized. Urbanization is in rise and when a government cant afford to develop rural areas, it will be cost-efficient to concentrate on urban areas and postpone the rural development. This is mainly true for countries with complex geography where it is highly expensive to build roads and infra-structures. When there is a trend on urban migration, even if you build hospitals, schools and universities in rural areas, it might be useless due to lack of people. When a nation is built with federal states, every state should have a major city or cities which could play a pull factor for people in the surrounding rural areas. This will avoid a concentration in one or two big cities. Around the world where it has been managed poorly, there is concentration in one city, for example Mexico City in Mexico or Jakarta in Indonesia. But with a good federal structure, like in the USA, there is no pressure in one area only. There are big cities of more or less equal size in many places, like New York and Philadelphia in the eastern United States, Chicago in North-East, Dallas or Houston in South-East-Central or Phoenix,Arizona and LA,San Jose, California in the west. There are other well planned cities in the mid or north. There is no pressure for one city or state. Similarly, Germany has a fantastic urban planning, with no pressure in one city only. Berlin, Hamburg, Munich, Rhein-Main-Ruhr area attract and connect well with surrounding areas. Big cities are pull factors for employment purposes but people can return home located just outside or in rural part in other time. Similarly, public transportation is also well connected between the cities and states. In German case, there is one big airport in Frankfurt am Main but other smaller sized but with higher capacity in Munich, Düsseldorf, Hamburg and Berlin. If necessary, The Frankfurt Airport can be expanded. It was located outside the town and the surrounding area was not used for settlement purposes. This proved to be sustainable in the case of growing pressure of population growth. London however, grew so rapidly that it is now impossible to expand Heathrow Airport. Though well planned, due to population pressure, it was proved to be unsustainable. The UK is not a good example of urbanization in comparison to other countries because, if there is a big problem in London regarding environmental disaster or terrorist activity, other cities cannot support it. London is seven times bigger than the next big city Birmingham.

For a country like Nepal, it is strictly necessary to follow the points mentioned above. In addition to that, there should be measures to mitigate the risk by natural disasters as Nepal is prone to earthquake. Free spaces are very necessary, there should be a limitation on the size of houses, houses must be built with earthquake proof technologies which at least reduce the risk of loss of lives, and the road linkages to other cities should be well connected. It will be sustainable to plan a big city projects in other parts of Nepal. Kathmandu valley is already over-crowded, it should first manage the crowd, relocate residential houses and make spaces for agriculture and roads. A large part of Kathmandu, Bhaktapur and Patan will be destroyed and hundred thousands will die if the condition remain the same. A rapid reconstruction is required.

Let me stop here. The aim of this article was to say that, instead of trying to develop rural areas, it is cost efficient to concentrate on urban areas where a lower amount of investment will generate higher returns. This will help the economy to grow and once there is an increase in economic capacity, development can be expanded to rural areas. Now, in the initial phase of development, money should be spent there where the returns are higher.  

The Connected World

By: Bikal Dhungel 

There are 194 countries registered in the United Nations. Within the countries, there are many sectors, like agriculture, energy, trade, service, production etc. For a long time, these sectors and countries were seen as separate entities. Some countries were rich, some were poor, some had a large agricultural sector, some had big service sector, some were energy producers, some were consumers and so on. But they were still separate nations and separate sectors. Although humans have always been a nomadic folk, from around 1600, there were quests for resources from abroad. Dutch East India Company started its operation since then bringing raw materials and agricultural products from abroad to the Netherlands. This culture was continued by others as soon as they grew. There was also trade between nations. But still, nations remained nations and they were busy increasing their own wealth without regard of other countries. Thus, there was colonization, there was unfair resource extraction and there was even slave trade. With this, some countries were also able to achieve economic development. But others remained poor. Countries fought war, for more power, for more wealth and the loss of others were not important.

In mid 20^th century, for the first time, humans could see the picture of the earth from space. This picture was stunning. In contrast of what people used to think about the countries, our earth was rather a small ball, around which there were white clouds and most of the earth was covered by blue ocean. It was round and it was connected. All countries were connected either by land or by ocean. It was also realised, how small was human family that time, with 3-4 billion people. Today were are 7 billion but still, we are more connected than we can think of. It was also seen that, when there was a gas emission from one place anywhere on earth, it reached the atmosphere which was shared by the whole world.

There is a thin ozone layer on top but this is being depleted by green house gas emission from one place with consequences that can be felt anywhere. One lesson we got from that picture was, no matter how many polluting industries we have in any country, the effect will be shared or in other words, we are ecologically connected and dependent.

Melting of ice in the Himalayas will cause floods in lowlands in India and Bangladesh. Deforestation in an area cause floods in lowlands. Draining hazardous waste in the river will kill the species in the ocean far away. Polluting the air with hazardous waste will affect other countries across borders with the wind. Nature sees no boundaries. Everything is regional or global. While ecological problems migrate towards the boundaries, economical aspects do the same. Economic activity in one country affect the other by the consequences it places on nature as a whole and the other should also bear the cost. We, the world community have slowly started to understand that, no matter what others do it will affect us. For example, developing countries have high debts. Their economic situation is not so good. But as they are paying heavy debts back to rich countries, they are allowing companies from rich countries to have an access to their resources, which then extract the resources in the form of exploitation. Actually this is the matter of two countries but what about the environmental consequences it cause ? Why should other countries pay the cost of this ? So, it is also the concern of third countries about what kind of bilateral relations do countries have. Moreover, not only economic activities affects the environment, but also environment affects economic activities. A city that is under water due to flood will have to stop its economic activities. As a result, its supply of goods to the other parts of the world will be halted or postponed. Imagine, the country US is out of order today due to some climate disaster. All the goods going from Europe and Asia will not go anymore because there is a crisis. There will be heavy loss in Europe and Asia. Similarly, goods coming from the US will also not come to Europe and Asia, causing scarcity. When there is no trade, there will be no production, no employment and the economy collapses. So, both, economy and ecology are connected to each other. Likewise, trade has an impact on environment, environment has impact on trade, energy has impacts on environment and the environment has an impact on energy.

Recently, we have seen that heatwaves in the US and Australia caused a sharp rise in food prices in the whole world. We have also seen that energy crisis, for example when oil exporting countries decided to cut the supply, caused a huge economical consequences. We have seen that, due to poverty, when poor people dump their waste in the rivers, sea creatures die. We have seen, when poor people cut trees for firewood, the nature will suffer and the cost will have to be paid by international community as a whole. We have also seen that population growth in India will cause the rise in food prices in the whole world. Even when Nepal has a negative population growth, the growth in India will affect Nepal. We also know that, a political instability in one country will cause refugee flow to the other and pressures the other country to tackle the problem. Simplifying everything, till now we thought that we were not so connected. We only thought that the world has globalized, there is free movement of people, goods and capital and what we do in one place will be known to the other due to advances in telecommunication technologies. But we never realised that we are also connected economically, ecologically, politically and many other cally.

Thus, it is important that we manage this inter-connectedness intelligently. Probably this is a good thing. Good because then we care about the whole world in every matter, political stability, economical stability, environmental standards, health issues etc. when we realise this, our greediness will also decrease. No national boundary is a good thing per see to solve worldly problems. For example, when we come back to the global issues, over-fishing is a big problem. It is very hard to agree on how many fishes to catch every day. Some countries are heavily dependent on it and are less willing to agree to catch less whereas others point on the extinction of fishes and tell that it is not good to allow over fishing. Both are right but if we have resource transfer scheme to the community that depended on fishing until now, they will probably agree on reducing the catches but as countries are governed by different governments, such thing is not possible. Also when we have a world as a whole, there is no need to fight for boundaries where they are allowed to fish. Administration costs to handle global issues will be less if we have fewer nations.

If we fail to manage the inter-connectedness, mistakes of one nation will impose burdens on others who did not do anything. This will be socially unjust. Though, we are far from creating 'One World'. But we might start by regionalism. There are already few successful regional cooperation units like the European Union. In the creation of such unions internationally, there will be a better management of inter-connectedness.