Global Competitiveness Report 2014-15: Nepal ranks 102 out of 144 countries

Facts about Nepal Earthquake

A strong (7.8) earthquake hit Nepal in the area near Barpak, a mountain village between capital Kathmandu and tourist town Pokhara. The earthquake was followed by many powerful aftershocks and a very powerful one (6.7) hit Nepal on Sunday April 26.

The earthquakes caused extensive damage to buildings and thousands of deaths and injuries and was even felt in Pakistan, India and Bangladesh.

Many (historic) buildings collapsed, temples have been ruined, roads destroyed. Nearly 8000 deaths in Nepal and tens of deaths in India & Tibet. The quake was followed by more than 430 aftershocks and another huge earthquake (6.8) on May 12.

According to the latest Global Competitiveness Report 2014-15, Nepal ranked 102 out of 144 countries. This is an improvement from 117 in GCR 2013-14, and 125 in the two years before that.

In the three main components of GCI, Nepal ranks 100 out of 144 countries in basic requirements for competitiveness (institutions, infrastructure, macroeconomic management, and health and primary education); 115 in efficiency enhancers (higher education and training, goods market efficiency, labor market efficiency, financial market development, technological readiness, and market size); 124 in innovation and sophistication (business sophistication and innovation).

The major contributors to the improved overall ranking are good progress on macroeconomic management (rank 37), health and primary education (rank 75), and financial market development (rank 75). Within macroeconomic management, the major contributors are the low government budget balance (rank 11) and low public debt (rank 38). Within health and primary education, the major contributor is the high net primary education enrolment (rank 19). Within financial market development, the major contributors are financing through local equity market (rank 47) and legal rights index (rank 29).

[The numbers are impressive, but the mechanics of getting there is not that straightforward. For instance, the good budget balance is not due to impressive fiscal management, but because of the inability of the government to spend allocated money combined with robust revenue mobilization, thanks to rising revenue from taxes on imported goods financed by remittances. For a low-income country like Nepal, which has huge financing need to close the infrastructure deficit, running a modest fiscal deficit without jeopardizing fiscal sustainability and macroeconomic stability is generally a good option.]

Nepalese businessmen think that the top five problematic factors for doing business are government instability, corruption, inadequate supply of infrastructure, policy instability, and inefficient government bureaucracy.