This book contains several articles and papers the author wrote over a period of three decades. It covers three important subjects of the external sector, namely trade, foreign direct investment (FDI), and remittances. While Section 1 covers issues on trade, Section 2 deals with topics on FDI, and Section 3 includes different aspects of remittances.
The author’s justification for reprinting his earlier writings, primarily based on the experiences of Nepal, is that many of the challenges concerning trade, FDI and remittances, which he previously scrutinised, continue to persist today, both in Nepal as well as in other developing countries.
With regard to trade, the author begins with an article relating to the import substitution strategy followed by one on export promotion measures. A detailed review of Nepal’s trade sector up to FY 2003/04 is presented separately where a number of recommendations are made for resolving the trade hurdles such as technological upgrading, investment in infrastructure, designing an appropriate legal framework compatible with regional and multilateral agreements, and the formulation of a new trade policy, among others.
Other topics deliberated in Section I include the Uruguay Round, the World Trade Organization (WTO) and regional trade agreements (RTAs), among others, where the author claims that countries should abide by the two-track approach, according priority to promoting multilateral trade negotiations under the WTO as well as pursuing meaningful RTAs.
On FDI, the first paper is on benefits, costs and determinants of FDI where the author mentions that political and economic stability are indispensable for boosting this financial flow. In a paper pertaining to increasing FDI flows during the post-conflict transition period, the author points out that FDI can be a powerful mechanism for revitalising industries and rebuilding infrastructure.
A number of short articles on other different aspects of FDI have also been included where the author discusses, among others, the challenges in attracting these flows, the significance of a stable political climate and guarantee of security, and formulation of effective policies for improving the overall business climate. He underscores that policies and strategies should clearly indicate areas in which FDI is sought.
Regarding remittances, the author has included a number of articles and papers focusing on its impacts, uses and policy options. He notes that though remittances have been playing a vital role in Nepal’s economic development and a number of measures have been undertaken for encouraging remittances through the official channel, there is much more that needs to be done. The author has also incorporated a paper relating to the productive use of remittances where he underlines that the government has to probe into what motivates its citizens to send money especially beyond individual family remittances and design its policies to take benefit of it.
The other articles on remittances, among others, pertain to the impact of the global recession on remittances, the involvement of microfinance institutions (MFIs) in the remittance transfer process, and the challenges brought about by these transfers where the author stresses that too much dependence on remittances opens up the country to exposure to external shocks linked to remittance-sending countries.
In a nutshell, this book brings together a collection of articles and papers intended to touch upon and advance the understanding of the changing role of trade, FDI and remittances in a globalising economy, and how the economic policies of the government are becoming increasingly intertwined. The suggestions expressed in this collection could be useful to policymakers in the process of formulating appropriate strategies for external sector development.
About the Author
Bhubanesh Pant is a former Executive Director of Nepal Rastra Bank (Central Bank of Nepal), where he was principally involved in the Research Department. He also served as a consultant to various research institutions and led studies on topics related to international trade and the financial sector. Pant holds a PhD in economics.