| Overview |
Nepal
is among the poorest and least developed countries in the
world with 42% of its population living below the poverty
line. Agriculture is the mainstay of the economy, providing
a livelihood for over 80% of the population and accounting
for 40% of GDP. Industrial activity mainly involves the processing
of agricultural produce including jute, sugarcane, tobacco,
and grain. Textile and carpet production, accounting for about
80% of foreign exchange earnings in recent years, contracted
in 2001-02 due to the overall slowdown in the world economy
and pressures by Maoist insurgents on factory owners and workers.
Security concerns in the wake of the Maoist conflict and the
September 11, 2001 terrorist attacks in the US have led to
a decrease in tourism, another key source of foreign exchange.
Since 1991, the government has been moving forward with economic
reforms, e.g., by reducing business licenses and registration
requirements to simplify investment procedures, reducing subsidies,
privatizing state industries, and laying off civil servants.
Nepal has considerable scope for exploiting its potential
in hydropower and tourism, areas of recent foreign investment
interest. Prospects for foreign trade or investment in other
sectors will remain poor, however, because of the small size
of the economy, its technological backwardness, its remoteness,
its landlocked geographic location, and its susceptibility
to natural disaster. The international community's role of
funding more than 60% of Nepal's development budget and more
than 28% of total budgetary expenditures will likely continue
as a major ingredient of growth. |
| Industries |
tourism,
carpet, textile; small rice, jute, sugar, and oilseed mills;
cigarette; cement and brick production |
