Thursday, January 1, 2015

Globalisation Context in Nepal

Different events in Nepal's history speak of its increasing contact with the world, ranging from the early visits to England by its Rana prime ministers, the Benares-based student movement for democracy in Nepal and the recruitment of Gorkha soldiers to serve in the armies of Britain, Singapore and India. The present phase of globalisation could be seen as beginning with the more recent establishment of state-owned media, the coming of multiparty democracy and the accession to the WTO. The capital Kathmandu has always been an important point in the trade between India and Tibet and a place through which Nepalis have gained exposure to international cultures and lifestyles. Vaidya and Bajracharya (1996) have portrayed the role of India as a gateway of trade transmission to Nepal, right from the time of the East India Company and detailed the process through which globalisation has made inroads into the country.

Now, the emerging issues around Nepal's WTO membership are still to be tackled rationally. The lack of attention paid to the concerns of least developed countries (LDCs) is frequently cited as a very grave matter. There are also issues to do with the participation and representation of LDCs at the level of decision-making in international forums. Along with this, proper prioritisation of the global development agenda and fair allocation of resources cannot be omitted (Bhandari et. al 2005).

Last but not the least, the access of Nepalis to productive sources such as land, water and forests and control over them is vital. The effects of trade liberalisation include an opening up to international markets and an increase in the choices of consumers. At the same time, a competitive market and the requirements of technical compliance may hinder trade opportunities, alongside dumping of international products and the displacement of local ones. Excessive dependence of farmers on life science companies may stand in the way of the use of local knowledge (Ghale 2009). The control of private companies over productive resources, their preference of areas to invest in, the low priority accorded to improvement of staple food crops and the food supply system, and the high prices of products introduced by food companies are serious challenges (Bhandari et al. 2005).

The globalisation process in Nepal began with the re-introduction of democracy in 1990 and it slowed during the armed conflict that followed from 1996 to 2006 (Upreti 2009). The issues of labour rights and working conditions were major slogans of the CPN (M), mainly to attract the support of the labouring class. However, the last two decades have seen globalisation making its presence felt in the form of deregulation, liberalisation and privatisation (GEFONT 2009).

With globalisation, labour exports have intensified from emerging markets and developing countries. This is especially true of unskilled labour. Traditional trade theory predicts that the integration of these countries into the world economy will exert a downward pressure on the wages of workers in advanced economies (Jaumotte and Tytell 2007). The involvement of workers from emerging economies in the global workforce brings important benefits to advanced economies. It has helped companies broaden their export opportunities and operate more efficiently. On the other side, workers have benefited from an increase in wages.

Modern communication technologies have led to the ubiquitous influence of Western cultural values. The process of globalisation has gone in tandem with the almost unanimous pressure for multiparty democracy. The discipline of ecological globalisation increasingly deals with the issues of global warming and the loss of biodiversities. It all goes to show that globalisation is a very large phenomenon and cannot be seen solely through economic eyes and the principles of the Washington Consensus. Be that as it may, we here deal with issues primarily related to employment and the labour force.

The hope of leapfrogging economic success is almost always around when new governments in Nepal introduce different fiscal policies. But the real situation is very poor, far from such possibilities. In per capita terms, Nepal's growth performance has been unsatisfactory and its per capita gross domestic product (GDP) remains low. A joint report by the Asian Development Bank (ADB), Department for International Development (DFID) and International Labour Organisation (ILO) in 2009 observed,

In 2007, the per capita GDP in 2000 prices was estimated at $243 [for Nepal] compared with $439 for Bangladesh, $660 for Pakistan, $686 for India, $1,144 for Sri Lanka, $1,277 for Bhutan, and $3,668 for Maldives. In terms of per capita GDP, Nepal is now where Sri Lanka was in 1960, Pakistan was in 1970, and India and Bhutan were in 1980. This lacklustre performance has occurred despite some very important reforms during the 1990s and 2000s. (ADB et al. 2009: 1)

These figures show that Nepal's economy lags behind those of other South Asian countries. An absence of inclusive growth, armed conflict, political and civil unrest, poor governance, weak policy and institutional contexts, and inequality have been the factors mainly responsible for the poor performance of the economic sector (UNDP 2009).

In rural Nepal, the economy is still sustained by indigenous strategies and approaches. The barter system exists in some villages to this day. Further, polarised political ideologies and the instability of governments have led to unstable plans and policies. ADB et al. (2009: 3) cite the following critical constraints to private investment and growth in Nepal.
  • Weak governance and slow recovery from civil war/conflict;
  • Inadequate infrastructure, particularly related to electricity supply, irrigation and transport;
  • Poor industrial relations and labour market rigidities; and
  • Inability to address market failures leading to slow structural transformation.
Nepal does not have as long a history of economic liberalisation as India. It has been practising, or more accurately, experimenting with different approaches to economic development. Paying rational attention to the economic sector is as important as depoliticising it. Nepali political practice seriously lacks this recognition. While some political decisions such as whether the development approach must be state-centered or market-oriented are inevitable, it is essential to have stable policies that are fully implemented. Amid the Asian economic powerhouses of China and India, Nepal is yet to craft an appropriate economic model for itself.

ADB et al. (2009: 3) point out some options to overcome present drawbacks and reach out for inclusive growth. They include strengthening governance, accelerating infrastructural growth and improving the power, transport and irrigation sectors. Alongside this, improving industrial relations and making labour markets more flexible, supporting expansion and diversification of the industrial base, and promoting economic and social inclusion through access to employment opportunities are very crucial. Better access to education, to productive assets such as land and credit and to safety nets, and creating a fiscal space through revenue mobilisation and improved allocative and operational efficiencies are part of the way forward.

Nepal in the WTO: Timeline
  • Applied under GATT on 16 May 1989
  • Working party was established on 21-22 May 1989 l Submitted Memorandum of Foreign Trade Regime of Nepal on 26 February 1990
  • Communicated its interest on 5 December 1995
  • General Council decided to give continuity to the working group on 31 January 1996
  • Memorandum of Foreign Trade Regime of Nepal submitted on 10 August 1998
  • First formal meeting of working party held on 22 May 2000
  • Schedules on goods and services submitted in July 2002
  • Second formal meeting of working party held on 12 September 2002
  • Protocol of Accession submitted on 15 August 2003
  • Working party concluded Nepal's membership on 15 August 2003
  • Fifth Ministerial Conference held in Cancun, Mexico (10-14 September 2003) approved the accession package of Nepal's membership
  • Deposited instrument of ratification on 23 March 2004
  • Became member on 23 April 2004
Source: Bhandari et al. (2005)
  • ADB, DFID and ILO (2009); Nepal: Critical Development Constraints, ADB, DFID and ILO, Kathmandu.
  • Bhandari, S., S. M. Shrestha and Y. G. Upreti (2005): Nepal's Accession to the WTO: Challenges and Opportunities for Nepal, Action Aid Nepal and Law Associates Nepal, Kathmandu.
  • GEFONT (2009): "Globalization and Big Business Houses in Nepal", Report of the General Federation of Nepalese Trade Unions (GEFONT), research/bigbuss, Accessed on 14 Aug 2009.
  • Ghale, Yamuna (2009): 'Women, Globalisation, and Land-based Exclusion in Nepal", in B. R. Upreti, S. R. Sharma and J. Basnet (eds.), Land Politics and Conflict in Nepal, Swiss NCCR, HNRSC-Kathmandu University, and Community Self-Reliance Centre, Kathmandu.
  • Jaumotte, Florence and Irina Tytell (2007): "The Globalization of Labour", IMF, http://, Accessed on 15 July 2009.
  • UNDP (2009): "Nepal Human Development Report 2009: State Transformation and Human Development", UNDP, Kathmandu.
  • Upreti, Bishnu Raj (2009): Nepal from War to Peace: Legacies of the Past and Hopes for the Future, Adroit Publishers, New Delhi.
  • Vaidya, Tulsi Ram and Buddha Ratna Bajracharya (1996): Nepal: Economy and Development, Anmol Publications, New Delhi.

Note: This is a portion of a book section co-authored by Safal Ghimire with Bishnu Raj Upreti and Yamuna Ghale. For full texts, click here. Citation: Upreti, BR, Ghimire, Safal and Ghale, Yamuna. 2013. Globalisation and Labour in Conflict-Engulfed Nepal. In Reddy, DN (ed.), Globalisation and Labour in South Asia. Chennai: Institute for Development Alternatives/PANOS South Asia, pp. 181–231.

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