Development Paradigm Shift: Insights from Nepal and Global Context

1. Development Perspectivesand Policy ProcessParadigm shift of development {Nepal compare to the global context} NASC NaraYan Bahadur Thapa,PhD

2. Development • Development is a process of change in human society which is based on economic growth, income distribution and preservation of social and basic values. -Rannan Witz

3. Approaches to development • Adam Smith (1776): Laissez faire economy • Classical thought: • Functioning of market forces (price matters) • Supply creates its own demand (J.B.Say) • Communist Manifesto (1848): • Curbing economic exploitation • Market failure (1929): Keynesian approach • Need for public investment & intervention • Post World War II: • Concentration on achieving economic growth by increasing GDP and employment. • Import substitution led growth vs. Export oriented growth • Model of Development: Capitalist, socialist and mixed development ( S. Pradip.).

4. Approaches to development • Dependency theory • Structuralist Approach • Market Failure • Government as implementer and promoter • 1990 onward: Liberalization, privatization, • Paradigm Shift: "Dethronement of GNP“ – "redistribution from growth” “human development”

6. Development Approach/ Paradigm of Development 1. Growth Approach j[l4d'vL cjwf/0ff • Emerging of developing countries. • Growth approach was adopted after 1950s and emphasized for capital formation, infrastructure development and industrial development for economic growth. • Distribution system was not effective, regional disparity and disparity bet. rural and urban areas due to emphasis I economic growth. 2. Trickle Down Approach dflyaf6 tnemg]{ cjwf/0ff • Trickle Down Approach was embraced after 1960. it was focused to the industrial devt. and rural development. IRDP were implemented in various part of country after 1970s. • Trickle Down Approach was concerned only fixes areas and sector. Therefore not covered neglected areas.

7. Development Approach/ Paradigm of Development 3. Welfare Approach sNof0fsf/L cjwf/0ff • After 1970, Welfare approach was focused to the human/people welfare. According to this concept Basic need approach, redistribution approach, poverty alleviation and initiation for community development were the main aspects of development. • It was not covered targeted people properly. Empowerment schemes was not adopted. 4. Participatory Approach ;xeflutfd"nscjwf/0ff • In 1080s, concept of new liberalism emerged and prioritize on people participation in development, role of private sector, and community/citizen mobilization. Basically it was reviewed of government role in development and service delivery. • Thai concept was also became unsatisfactory , failed user committees role, lack of trust of private sector to the people, are the main cause to be unsuccessful of participatory approach. • By the early 1980s, however, participation gradually began mainstream in development paradigm

8. Development Approach/ Paradigm of Development 5. Human Development Approach dfgj ljsf;sf] cjwf/0ff • The concept of economic liberation promote the competition but the human development aspects still week. Therefore, human development aspect took place after 1990. • Sustainable development, equitable distribution, human and gender development, decentralization along with economic liberalization were the central point for development. • By the late 1990s, the development discourse emergence as participation as a right of citizen. • Now, people participation is wide and it is linked with RBA.

9. Development Approach/ Paradigm of Development 6. Good Governance Approach ;'zf;gsf] cjwf/0ff • After 2000, Good Governance Approach was adopted and focused on social inclusion, role of civil society, citizen right and RBA. • Transparency, accountability, citizen engagement in development are the main aspects for strengthening the good governance in development and service delivery. • Now, inclusive participation is linking with the human right approach

10. ljsf;dfgful/s ;+nUgtfsf] dfu{lrqA Roadmap of Citizen Engagement in Development Citizen Citizen Moblization Citizen Empowerment Voice Choice Demand Needs Information Awareness Involvement Organization Consultation Skill & Capacity Partnership Proactive Social Relations Citizen Control Citizen Well being Popular Participation (Socio-Economic Transformation)

11. Historical Trends and patterns of Development in Nepal (Main Source: Nepal’s development tragedy)

12. Historical Trends of Development in Nepal During Rana regime, • There was urdi system before the Rana regime. • Ranas made their fortune by exploiting land grant system (Birta) for their personal use. Main function was to maintain law and order and tax collection. • Rana rulers enjoyed luxurious life at cost of nation’s treasury. • However, during this period, there were also few remarkable activities, Jung Bahadur initiated tea plantation in Illam in 1861. Chandra Sumsher’s contribution in constructing irrigation canals were noteworthy. BirSumsher brought piped water to Kathmandu Valley. In 1911 the rulers established the PharpingHydroelectric Company. Padmasemser-education.

13. After 1950 (The decade of 1950-60) Growth approach • These were some isolated development works conceived without any sustainable strategic plan. • After the British left India in 1947, Tibet came under China’s control in 1950. • These movements Compelled the Rana prime minister Mohan Sumsher to proclaim on 2051, the restoration of the king, • Under centralized bureaucratic settings, Nepal’s First Five year Plan (1956-61) was implemented in 1956. • During this period the efforts were made to stage economic restructuring.

14. In comparison to Lenin’s democratic centralism, in which the ruling party directs revolution, in majority’s view, BP’s approach of community participation was relatively more effective in addressing poverty alleviation and inclusiveness agendas. (Pakurel) • Some programs under BP’s leadership were ( Initiation of the concept of abolition of Birta, tax free land, Establishment of National Planning Board, Use of army in development work especially in road construction

15. Panchayat regime (1960-71) Tricle down Approach • King Mahendra, during his regime between 1955 and 1972 introduced a wide variety of socio-economic and political experiments. • He executed land reform programs. • The plan missed most of the priority sector ( transportation & communication , agriculture & irrigation) targets. As the constitution was suspended, • The second plan 91962-65) was prepared covering the period of three years. This plan was sucessful with regards to only organizational improvements. • Achievement in the third Plan (1965-70) and the Fourth Plan (1970-75) remained incomplete and unsatisfactory. (Beginning of Welfare Approach)

16. The country continued the inward looking economic policy during most of the 1980’s. various issues of economic Surveys show that, although economic growth remained at 4.8 %, the private sector investment was low and there was an absence of foreign direct investment. • Top priority in the fifth plan (1975-80) was in agriculture development, population control and increased industrial production. For the first time, the problem of poverty reduction was addressed in the fifth plan. It was successful in creating awareness but remained negligible in reducing inequalities.

17. With agriculture as top priority sector, the Sixth Plan (1980-85) could not yield any significant results. ( beginning of Participatory Approach) • Seventh Plan (1985-90), for the first time, introduced basic needs program (BNP) where food and clothing for everyone was made an important element of the BNP. It became a political trump card.

18. During 1990 – 2006 ( beginning of Human Development Approach) • For instance, after liberalization initiative was pursued in early 1990, over the three-year period ending 1993/94, key macroeconomic indicators are shown to have improved. The GDP growth averaged 5.7% and inflation came down to single digits. • The contribution of agriculture to the GDP was 60% during the 1980s. At present, its contribution is 32.8% to the GDP while industry remains at 14.4%. (Main Source: Nepal’s development tragedy)

19. Eighth Plan was historic document in the sense that Nepal became one of the leading nations in South Asia that promised for liberalization, globalization and privatization. This plan is remembered for long with regards to the development of industrial policy; foreign investment and enterprise act; trade policy; and financial sector reforms. • The Ninth Plan (1997-2002) continued the policies for economic liberalization and privatization. Reforms in tax system and banking were quite visible and powerful in yielding expected results. Some of the successful policies included, Foreign Aid Policy, 2002 and Income Tax Act, 2002.

20. The Tenth Plan (2002-2007) was introduced as poverty reduction strategy paper (PRSP). (Good Governance Approach ) • The government aimed at linking the Plan with the annual budget by simultaneously preparing the Medium-Term Expenditure Framework. • The special feature of the Plan had been the inclusion of the logical framework, identification of prioritized programs and projects and identification of monitoring indicators.

21. Therefore, theoretical foundations of liberalization and globalization were developed, but the Plan failed to win the heart of the people because the gap between the rich and poor continued to widen. • The objectives of the Plan’s Strategy Paper- Employment – oriented and broad-based economic growth, improved governance and service delivery system, investment in physical, social and economic infrastructure, social and inclusive development – were not met (NPC, 2009).

22. With an aim to reduce poverty and increasing employment, the first Three Year Interim Plan (TYIP) for the period 2007/08 – 2009/10 was prepared immediately after the comprehensive peace accord with the Maoists. • The long term vision of TYIP (2010/11 – 2012/13) was to transform from a least developed country into a developing nation within two decades of period. Establishment of peace, equitable and inclusive economic growth, livelihood, employment were the main priorities.

23. Furthermore, the second TYIP (2010-13) offers long-term vision of transformation by achieving the target of MDGs such as creating dignified and gainful employment opportunities, reducing economic inequality, ensuring regional balances, improving living standard of the common Nepali by eliminating social exclusion.

24. The long term vision of TYIP (2013-16) was to upgrade Nepal from a least developed country into a developing country by 2022. • Role of public ,private and cooperative sectors was clearly defined in development in this plan. • The Goal of 14th plan is to reach the destination to the standard of medium level economic growth rate countries through establishment of welfare state with social justice • Priorities in economic growth and poverty reduction and social transformation.

25. Phases of Development in Nepal • Transportation & communication , agriculture & irrigation, Building planning capability, economic restructuring., community participation, Institution First to Third Plan (1956-1970) BS.2013-2027 Fourth & Fifth Plans (1970 – 1980) BS.2027-2037 • Welfare Approach, Regional development; Infrastructure development, poverty reduction , Sixth & Seventh Plans (1980-1990) BS.2037-2047 • Participatory Approach , Basic needs, Growth with equity • 8th & 9th Plan economic liberalization and privatization. Sustainable economic growth; Poverty Reduction (PRSP), Reduction in regional disparity,Good Governance Approach ,MDGs Eighth to Tenth Plans (1992-2007 BS.2049-2064) • Employment centric inclusive & equitable growth; poverty reduction; SDGs: Graduating from LDC status to a Developing Country status by 2022 (GNII, HAI & EVI). 11th to 14th Plans (2007-2019) BS.2064-2076

26. Analysis of some Indicators • Nepal’s poor GDP growth rate did not show consistency. After 1990, Nepal experienced highest growth rate in the year 1994 (7.4%) and lowest growth rate in the year 2002 (0.12%). In other years, growth rate remained in between these two values. • Besides Nepal, there are several other countries in the world that are facing political vulnerability and high cost civil strife, but are still in a position to maintain satisfactory level of economic growth.

27. For example, during the 26-year long conflict, Sri Lankan growth rates averaged nearly 5%. In Afghanistan, the GDP growth rate remained at 20.4% in FY 2009/10. High growth figure was the result of a record harvest and large increase in donor grants. Although the growth declined to 8.2% in 2010/11, it is still high and shows the sign of the stability in growth yield. • IMF Estimates shows, Iraq registered real GDP growth of 9.9% in 2011 and it projects 11.1% for the year 2012. • The case for countries like Iraq and Afghanistan could be a separate area for investigation where politics and economy seems to have a negative relationship.

28. An analysis of social-economic aspects of development in Nepal.

29. An a social-economic aspects in Nepal. • Nepal has a diversity of ethnic groups and languages. This diversity has been characterized generally harmonious. • Women generally (but not always) occupy a lower position in the social hierarchy than man. • Among the various ethnic groups Brahmin12.1% And Chhetri16.8 percent. • Magar (7.14%), Tharu (6.75%), Tamang (5.64), and Newar (5.48%) ethnic groups come next, accounting for 25 percent of the population. • The remaining 46 percent falls into various ethnicity and castes and a small percentage are also of non-Nepali ethnicity. • Some examples are: richest 20percent of population share 44.9 percent of per capital consumption while the poorest 20 percent of population share only 7.6 percent; • Poverty is more severe in rural areas than in urban areas with poverty headcount rate 15.46 percent in urban areas compared to 27.43 percent in rural areas;

30. Nepal still remains one of the poorest countries in the world and currently ranks 144th out of 188 countries on the Human Development Index (HDI). • Though Nepal’s HDI nearly doubled from 0.242 in 1980 to 0.463 in 2013 and at present 0.558 (HDR, 2016)

31. Still, Disadvantaged population facing the problems. • The disadvantaged population facing social exclusion, remoteness, resource poverty, food insecurity or less income, • Poverty is based on gender, caste, ethnicity and socio-economic status.

32. Some social indicators are positive.

33. Some positive Indicators • The HDI values in 2011 and 2012 it stayed at 0.460 and 0.463 respectively according to UNDP’s Human Development Report 2013. At present it is 0.570 (HDR,2016) • Annual average economic growth expected 7-2 in FY 2075-76. • Population below poverty line 21.6 to 17.0% • Targeted HDI 0.540 to 0.570. • Gender empowerment Indicators 0.56 to 0.58. • Expected age (Life expectancy) 69 to 72. • Female ownership in property 26% • Apply of Gender Responsive Budget (GRB) • 33% female representative in state structures • Maternal mortality rate only 258 per lakh. • Economical active population (EAP) 57% (Population Bonus)

34. Some positive Indicators and Economic Performance • The economy grew by an estimated 6.9% in FY 2017/18: • Recovering from devastating earthquakes in 2015; • Disrupted trade from February 2016; • Better management of electricity supply; and • Better harvests due to a favorable monsoon • Services (53% of GDP) expanded notably • wholesale and retail trade, hotels and restaurants, transport, and tourism • High consumption spending in FY 2017/18. • High growth in private sector investment (grew by 27.2%) a third of GDP & public sector investment (grew by 16.1%) : 6% of GDP

35. Role of Development Partners (aid intervention),

36. Role of Development Partners (aid intervention), • Development assistance remains one of the major sources of funding to meet the need of development finance in Nepal since last six decades. • The development cooperation is expected to play important and meaningful contribution in achieving the SDGs and becoming Middle Income Country by 2030. • However, we must be careful in ensuring the efficient, effective and complementary resources that are provided through development assistance. (Source devt. Cooperation report 2016 )

37. Assistant and Budget: • On-Budget: Assistance which are reflected in the Government’s Budget Book (Red Book). This is also mentioned in the Source Book (also known as White Book). • Off-Budget: Assistance which are not reflected in the Government’s Budget Book (Red Book). The details of such assistance are included in the “Statement of Technical and Other Assistance” Book (also known as Blue Book • On Treasury: Assistance channeled through the Government treasury system which includes the “Cash” and the “reimbursable” mode of payment. • Off Treasury: Assistance not channeled through the Government treasury system. This include “direct payment” and “commodity” aid mentioned in the Source Book and the amounts reflected in the “Statement of Technical and Other Assistance” Book.

38. Modality of Development Assistance Program Support: This support is committed / dedicated for certain program with broad objective . Leadership by the recipient country or organization; a formalized process for donor co-ordination and harmonization of donor procedures for reporting, budgeting, financial management are the main aspects. Project Support: The support dedicated to a project with specific objective and outputwhich are coordinated to a certain extent but do not meet the criteria for a program-based approach or SWAP.

39. SWAP: Specific program based approach covering a whole sector (e.g. Education, Health and so on). This refers to the common approach led by the government with the support of various DPs within a common and joint funding arrangement. Humanitarian Assistance: This assistance is designed to save lives, alleviate suffering and maintain and protect human dignity during and in the aftermath of emergencies. Budget Support: The fund that is directly transferred to the Government’s treasury by DPs which the Government can allocate on its priority and programmes.

40. Type of DPs Multilateral: Institution or agency with multiple participating nations or parties providing development assistance (e.g. World Bank, Asian Development Bank, Asian Infrastructure Investment Bank). (Multilateral amount is more then 58% in last fiscal year) Bilateral: Member States of the United Nations that provide development assistance directly to the recipient country (e.g. India, China, UK, USAID etc.). It may also refer to country to country development assistance. INGOs: An international non-governmental organization (INGO) has the same mission as a non- governmental organization (NGO), but it has international scope and outposts around the world to deal with specific issues in many countries. All national/international non-governmental organizations (N/ INGOs) that are established in Nepal with the objectives of mobilizing development assistance are to be registered with the Social Welfare Council (SWC). (Source devt. Cooperation report 2016 )

41. Some Data from Development Coopereation report 2015/16

45. Economic Liberalization and labor migration • Economic liberalization and globalization was started around 1980s and accelerated rapidly since then. • After adopting liberalization, opportunities of labor and employment in Asian countries and even more high income and high-medium income earning countries attracted to departure of people of least developed countries to developed countries for employment. • Due to the minimum opportunities of employment in the least developed countries like Nepal labor force migrated to the developed countries.

46. Increasing demand of labor and high economic boom from 1990s A.D in east Asia and Gulf (Khadi) countries demanded the labor force. • On the other side, due to arm conflict in Nepalnegative effects were seen in the employment which gave a rise to the problem of unemployment. • This is why, organizational effort started for the employment in other countries except in India • With the commencement of Foreign Employment Act, 2064, increase in the number of people going for foreign employment.

47. In recent years migration has increased dramatically with the growing demand for Nepali labour in Malaysia, South Korea, Qatar, Saudi Arabia and other countries in the Middle East. • Migration is a common household phenomenon as 53 percent of the households have at least one absentee living currently within or outside the country. • Overall, about 20 percent of the total population is absentee population. Among broad age groups, the proportion is the highest in the age group 15 to 29 years

48. Migration and remittances in Nepal • Migration overseas for employment is common and the total number of Nepali labour migrants overseas is estimated to be over 3 million people. Women comprise 13.3% of migrant workers (NLSS 2011). • An estimated 400,000 Nepalese migrate overseas seeking employment every year. To date, the total number of Nepali labour migrants overseas is estimated to be over 3 million people, of which 85% are from the rural areas (NLSS, 2011). • 80% of these migrant women, majority of them undocumented, are working as domestic workers. Many destination countries mostly in the Gulf do not recognize domestic work under their labour laws, thereby making women migrants vulnerable to human rights violations. Besides the challenges in the foreign land, they also face stigma and broken marriage upon return to homeland.

49. Migration and Remittances. • According to the NLSS 2010/11, 55.8 percent of the households in Nepal receive remittance, • In Nepal, Eastern Terai has the highest percentage (43.2 percent) of active population outside of the area, followed by Central Terai (38.5 percent), Central Hills (29.7 percent) and Eastern Hills (28.5 percent). • These data, however, are based only on registered migrants. The number of unregistered migrants to India and even other countries is also significantly high.

50. Some Figures from Labor Migration Report 2017/17