In the last decades, slow growth and jobcreation have encouraged emigration, further dampeningdomestic sources of growth in Nepal. Tepid growth over thepast decade, the slowest in the region, has resulted in fewjobs being created, leading to more Nepalese workers seekingopportunities abroad. Their remittances have helped reducepoverty in the country and finance increasingly large tradedeficits. Like other inflows of foreign exchange,remittances have led to an appreciation of the real exchangerate. This has adversely affected export competitiveness andhas had no positive effects on productivity (unlike foreigndirect investment). This report attempts to determine theextent to which these obstacles can be alleviated by policydecisions, as well as exactly which policy decisions shouldbe prioritized. The policy notes included in this report aimat supporting the National Trade and Integration Strategy(NTIS) through an evidence-based approach. To do so, thesenotes combine the following elements: (i) existing analysison Nepal’s competitiveness from different angles (includingexisting competitiveness assessments on transport, access tofinance, the tourism sector, previous trade competitivenessreports, and so forth); (ii) international experience fromcomparator countries on good practices for trade policyreforms; (iii) new analysis for Nepal, applying cutting-edgemethods on a wide set of databases; and (iv) field-levelinterviews with the private sector, and consultations withdonors and the Government of Nepal.
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