Nepal: Critical Development Constraints (Country Diagnostics by Rameshore P. Khanal

By Rameshore P. Khanal

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Additional info for Nepal: Critical Development Constraints (Country Diagnostics Studies)

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As previously discussed, the recent low levels of social returns could be due to inadequacies in human capital or infrastructure. 28 0 1990 1995 2000 2006 Note: Social returns have been estimated as the ratio of gross domestic product growth and the investment rate. Source: Based on data from World Bank (various years). 1. Human Capital Unemployment rates are low but underemployment rates are high. In the absence of regular labor force surveys, it is difficult to assess the true extent of employment and unemployment levels at any given point in time.

The number of branches increased again, to 574 by January 2008, reducing the number of inhabitants per branch. This has in part been due to the opening of new private banks and new private bank branches, which are largely concentrated in the Kathmandu Valley and other urban areas, and has not had much effect on the rural population’s access to banking services. Branches as a result, Nepal has had surplus savings. Moreover, borrowing costs from the domestic banking system are low and the banking system has excess liquidity that could finance current trends in investment.

Thus, out-migration may not be leading to a skill drain that constrains private investment and economic growth. Moreover, the open border with India provides Nepali investors with access to a large pool of skilled workers from India—as many as 15% of the technical workers employed in manufacturing are of Indian origin (MOICS 2004 ). 29). More than 21,000 students went abroad in 2008, a 12-fold increase over the 2003 levels. 2. Nominal Monthly Wages in Major Sectors (NRs) Sector Agriculture Industry Construction 1998/99 2001/02 2003/04 Kathmandu Skill/Location 3,000 3,000 3,400 Birgunj 1,500 2,550 3,500 Biratnagar 1,500 1,500 2,400 Skilled 1,960 2,276 2,620 Unskilled 1,800 2,116 2,560 Kathmandu 5,700 6,300 9,500 Birgunj 3,900 4,500 5,625 Biratnagar 4,470 4,800 5,700 Kathmandu 4,950 5,550 7,250 Biratnagar 3,870 4,200 4,900 Kathmandu 3,000 3,450 4,250 Biratnagar 2,370 2,400 2,900 Skilled Semi-skilled Unskilled Notes: Figures for Industry refer to minimum monthly wage, including allowances, which are the same in Kathmandu, Birgunj, and Biratnagar; Construction refers to carpenters and masons.

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