BY Krishna Raj Bajgain

Innovation, philosophy, social values, and major events such as pandemics and wars are pivotal factors that define the source of state functions and necessitate new policy directions to guide its economy. These factors also elucidate the ongoing transformations in the contemporary world.

Artificial Intelligence has emerged as a profound influence on the global economy, triggering a revolution in the production and distribution of goods and services while transforming people's livelihoods. However, a new global conflict has arisen concerning access to these technologies, leading to a new phase of dominance through technological superiority. Restricting the supply of rare metals has further exacerbated the situation, causing disruptions in production processes, with underdeveloped countries bearing the brunt of these consequences. Openness, democracy, and liberalism have accelerated the process of globalisation, but the pandemic and global conflicts have slowed this down. A rising tide of nationalism and protectionism is becoming more pronounced worldwide.

Two fundamental pillars of traditional values and norms within the social framework are rapidly disintegrating, with devastating effects on the demographic indicators of nations. Some countries are grappling with existential challenges due to negative population growth rates. To address demographic shifts, many developed countries have turned to immigration as a solution. But this has also sparked social unrest and bolstered ultra-nationalism in many developed nations. The liberal immigration policies of the developed world have been catastrophic for underdeveloped countries, which suffer from a shortage of the workforce due to uncontrolled outflow of human resources.

With individualism prevailing over collectivism, isolation is spreading at an alarming pace, carrying numerous social and economic implications. The need for self-reliance in the supply chain of essential goods has become apparent due to the unforeseen impact of COVID-19 on transportation, communication, and global supply systems. Initiatives like "Make In" and "Made In" are the result of the fading trust in the global supply chain.

Confidence in the global supply chain, underpinned by the new world order, is eroding due to friction between rival powers worldwide. Nations are exploring alternatives to secure their national security interests, particularly regarding the supply of strategically important products like food, energy, human resources, technology, and arms. Events such as the Russia-Ukraine war, tensions between the US and China, and the resurgence of Middle East conflicts have brought about significant changes in global supply chains. Countries that previously embraced liberal agricultural policies are shifting towards protectionist policies, while those with existing protectionist policies are adopting even stricter measures to control international trade in agricultural products.

Nepal is also experiencing the painful effects of these global phenomena. The exodus of its workforce has imposed an unbearable social and economic cost on the country. Kathmandu, once the dream city for every Nepali youth, has now become a mere transit point for going abroad. The primary aspiration of Nepali bureaucrats, politicians, academicians, the business community, and even farmers is to send their offspring overseas for a better life. Convincing their children that they have a bright future in Nepal has become increasingly challenging.

As mentioned earlier, the development of new technologies, the emergence of new philosophies, changes in social structures, pandemics, and conflicts necessitate significant policy and structural changes in Nepal.

First and foremost, it is imperative to restructure educational institutions and transform them into centres of entrepreneurship. Parameters should be established to cultivate a civilised, cultured, and educated society that enjoys personal freedom and public and private lifestyles similar to those in developed countries. Achieving this environment requires a paradigm shift in wage rates, productivity, and financial access.

Equally important is the provision of tax exemptions to foster massive industrialization. Restructuring Nepal's public administration to offset the impact of the tax exemption policy is also crucial.

It is also necessary to revise the national population policy to maintain population growth rates and compensate for the emigration of the workforce. This entails revising family planning and abortion policies. Promoting joint family structures can help preserve two fundamental institutions - marriage and family.

To address the labour force shortage in Nepal's industrial and agricultural sectors, a significant mechanisation process in agriculture, integration of artificial intelligence in the service sector, and automation in manufacturing are necessary steps. This is necessary to mitigate the problems arising from significant trade imbalances and emigration. 

(Bajgain is a Senior Officer with the Trade & Export Promotion Center. The views expressed here are his personal.)