Globalization is a "process" of integration with the world economy; liberalization is the "means" of such a process and growth is the "end" of both liberalization and globalization. Globalization is the growing unification of global economies and societies through unhindered movement of goods, services and people and information across national borders.
Being a complicated and varied range of phenomena, it can be broken down into separate aspects; such as industrial, financial, political, informational and cultural globalizations. And some features of globalizations are the minimum role of the government in economic activities, economic openness, free flow of goods and services, national treatment of foreign goods, services and technology, structural changes in production and technology and influence of multinational corporations in policy formulations.
After 1990, Nepal adopted the Structural Adjustment Programmes (SAP), implemented by the World Bank and the International Monetary Fund. This approach included solid targets related to fiscal austerity, privatization, trade liberalization, currency devaluation, retrenchment of the government and deregulation. Thereafter, the government largely curtailed its roles, and the private sector took the lead role in the economy.
As the 147th member of the WTO, Nepal joined the organization in 2004. Nepal entered the WTO with an aim at integrating its economy with the international market. In addition to the opportunities that come with joining the WTO, Nepal was not well prepared in assessing that it may also face many threats.
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People who favor globalization in Nepal argue that globalization can support domestic businesses to reach the international market. Similarly, Nepal has increased the access to various goods and services available in the country through imports at a lower price. Moreover, the SAARC, BIMSTEC, etc as emerging regional integration organizations have become effective ways to overcome divisions that hinder the flow of people, ideas, products and services. However, as the country is trying to keep its pace with modern technology and the process of globalization, the questions have been raised by analysts: – “Can Nepal handle the adverse effects of Globalization? What would Nepal’s economy be in the global market?” Such questions have become the major issues that focus on the future of our country.
After globalization and entering liberalization, it has been witnessed in Nepal that the private sector only adopted initiatives in low-risk and highly profitable social, financial, service and transport sectors and not in the key sectors of the economy such as manufacturing, agriculture, infrastructure and technology sectors. And in the name of privatization, the government sold many public enterprises to private entrepreneurs, who failed to operate them. This failure became counterproductive for the development of the manufacturing industries of Nepal.
As an impact of globalization, Nepal is in an odd position, and it is excessively facing external influences in its internal matters and economy as well. The major world powers have a tendency to intervene in the internal affairs and influence the authorities to work in their favor and in the name of big projects, they enter the country to fulfill their strategic objectives.
For example, the controversial projects such as the Millennium Challenge Corporation (MCC) of the US and BRI of China in Nepal, are considered as better tools to expand their strong presence in Nepal to run their undeclared activities. Moreover, after globalization and liberalization of the economy, India has monopolized in Nepali market by flooding its exports. It could go up to any level to protect its export trade and business monopolization in Nepal. Therefore, these countries are more interested in achieving their strategic goals rather than the real transformations of the Nepalese economy.
Under globalization, competition is not only limited within the internal markets but among the external markets as well. Competition with the external market is not an easy task and Nepal has been far behind in this endeavors. As a result of obsolete policies and weaknesses, our internal markets have been continuously threatening to be wiped off against the breeze of global competition through import of cheap commodities. And businesses in Nepal began to realize their limitations as they were not geared to meet the challenges of global competition.
In addition, powerful nations are leading a global slide towards subsidies, export controls and protectionism, which are against inner norms of globalization. It is a dangerous spiral of protectionism that was set in motion worldwide.
On the contrary, Nepal lacks protective measures to its domestic products both in agriculture and the manufacturing sectors, while neighboring countries have strong protections to their industries. Moreover, Nepal is also suffering from India's restrictions on many Nepali manufacturing and agriculture products to enter there, which has imposed tariff and non tariff barriers, quarantine restrictions and quantitative restrictions on many Nepali products. Only recently, as a result of scarcity of tomatoes in the Indian market, it removed Nepali tomatoes from quarantine restrictions on vegetable lists temporarily. If countries cannot work together to address such problems on a reciprocal basis, the poor countries will suffer accordingly.
The overall impact of globalization is at a negligible level and not very bright for Nepal. And the investors are less interested to invest here because they are not confident that the government policy would protect them as government policies keep changing with little respect for firm commitment to the business sector.
In this era of globalization and liberalization, landlockedness is not considered the only factor to remain undeveloped. Despite no access to sea, with convincing policy, many landlocked and poor countries are performing well by prioritizing and investing enough in sectors of comparative advantages. For example, Bangladesh has prioritized the readymade garments sector and Bhutan has prioritized the hydropower sector by exporting these products in high volumes.
During the 1990s, Nepal, Bhutan and Bangladesh were, more or less, in similar economic parameters. However, at present their per capita income, exports, and contribution of the industrial sector to GDP are much higher than ours and in some areas their accomplishments are unimaginable for us. Nepal is also developing its hydropower, tourism and the new promising sector of information technology as priority sectors. However, the accomplishments of these sectors are limited and comparatively small in volume due to our policy constraints.
Some analysts argue that companies in Nepal compete in a global environment without the facilities and infrastructure enjoyed by leading global players. In such situations, it is obvious that we have fewer opportunities to compete in the global market. In short, for countries like Nepal where the majority are poor and underdeveloped, they have a different opinion - for them globalization is a disease, not a medicine. Nepal needs to reshape and diversify its entire economic model and national policies by concentrating on areas of comparative advantages.
