The binding constraints in Nepal's development
Development can mean a great many things. Often we reduce it to economic development – the growth of GDP, or household income – but it also includes social opportunities and political rights. And, arguably, a very long list of other things valued by or helpful to those who need development the most.
Not surprising, the portfolio of development projects in Nepal and other developing countries is incredibly diverse. USAID’s list of engagement in Nepal alone include agriculture, food security, and economic growth, health, family planning, education, biodiversity, global climate change, democracy, human rights, and governance. Low levels in any of these categories will hold back Nepal’s development prospects.
However, from observation in the field, one category is missing from the list: roads. Or, more broadly, infrastructure. It is an often overlooked sector because it isn’t interesting or “sexy”, and one that is difficult to get support for in Washington or Brussels, but it is clearly something that holds back expanding the welfare of millions of Nepalese people.
Why? Because transportation is integral to markets. The harder it is to transport goods to market, the less likely they are to be brought to markets where they can fetch the best price. Many farmers in Nepal could grow cash crops that bring in much higher earnings, but getting them to market is prohibitively expensive.
Go to a market in downtown Kathmandu and shop for apples. What you will find are almost all Indian apples, brought into Kathmandu from hundreds, sometimes thousands, of miles away. Apples grown just a few districts away never make it to the market here even though most shoppers would prefer locally grown apples.
Just how bad is it? One of our survey districts, Dolakha, is just 130 miles away from Kathmandu. A trip that from where I am sitting in College Station, would take less than 2 hours with traffic. In Nepal it requires a specialized vehicle, and nearly 12 hours of traveling (and only because Japanese aid money recently funded a significant road improvement for about half of the stretch we travelled). We were only transporting four people – imagine the difficulty of transporting a few tons of agricultural goods.
As in many other developing countries, what is most needed is infrastructure improvement, and it is typically a highly cost-efficient investment for aid donors. Infrastructure projects also offer short term employment opportunities for many locals. However, there is pressure from donor governments to invest in anything but infrastructure, making it difficult to respond to this need.