Nepeconomic.com
The Analysis..

Features of Nepalese economy

UNFAVORABLE FOREIGN TRADE

Wide range of topography
Variety of climate
Mass poverty
Dependency on agriculture
High rate of population growth
Unfavorable foreign trade
Under-utilized natural resources

Foreign trade plays a vital role in the economy of any country, more so in the economic development of under-developed countries like Nepal. It is known as the “vehicle of economic development.” However the foreign trade in Nepal is not favorable. Here are the problems for being unfavorable foreign trade:

(1) Landlocked

Nepal is a landlocked country. Foreign trade facilities available to coastal countries are not available to Nepal. The country is surrounded in the east, west and south by Indian landmass. Nepal can have access to the sea only through India so Nepal is not only landlocked but also India-locked.

(2) Inadequate competitive capacity

It is very difficult for Nepal to compete in international market to promote exports. Cost increases because of transportation expenses in transit across Indian territory. There has been no improvement in quality. It is not possible to sell poor quality goods at high price.

(3) Inadequate Information

Nepalese exporters are not well familiar with international market possibilities. They have poor knowledge of “where to sell and how to sell.” Nepalese diplomatic missions on foreign countries are inactive and are far from adequately helpful.

(4) Inadequate Surplus

Production has proved inadequate to generate necessary exportable surplus. Therefore, imports are rising faster than exports as cited in figures above. Trade deficit is becoming larger every year.

(5) Low quality

Nepal’s export items have low quality. Prices are high. Nepalese items have sympathetic market abroad in many cases. But sympathy can not continue for a long time. It is not possible to withstand international competition without improving quality and reducing cost.