Nepal has had a good economic growth since the mid 80s and throughout the 90s. This has led to increased inequality, but in general the poor have also benefited economically. The exception is some ethnic groups of the central and eastern hills, where labour migration has been more limited. This document presents the development of poverty rates for different castes and ethnic groups of Nepal, and finds a strong relation between social exclusion and economic poverty.
The author supports an economic model, recommended by some Nepali scholars, that combines a social security net with competitive markets and secure property rights, which, in turn, may foster domestic and foreign investments in productive physical and human capital. The report recommends that a number of policy interventions may support an inclusive growth process:- education and training programmes leads to improved human capital;- subsidised health services insure people against major risks, which, in turn, allow them to make profitable investments rather than investments that make them able to handle different types of risk; - investments in physical capital, like transmission lines, roads and irrigation is necessary for economic growth, and a broad-based tax system is necessary to finance these and other costs;- some targeted programmes may be beneficiary, such as land redistribution to landless Dalits in remote villages of terai, and experiments with a rural employment guarantee in the same areas.
