Externally Determined Development: Does Indo-China Rivalry Explain Nepal’s Underdevelopment?

Employing the political economy approach in the historical context, this article examines the role of Indo-China rivalry in explaining the persistence of underdevelopment in land-locked Nepal. This external dimension of Nepal’s underdevelopment has largely been overlooked in the existing literature. China in the north and India in all the other three directions are two powerful, immediate and rival neighbours of Nepal. Both of them have their various national interests in Nepal, and often these interests have been contradictory and rival. Consequently, the constant pressure on Nepal to balance these interests adds a geo-strategic dimension to Nepal’s development challenge. While this balancing game has become a reward for Nepal’s ruling elites, the consequences of this for the mass of the Nepali people has been persistent underdevelopment. This experience of underdevelopment by the Nepali people has contributed significantly to the radicalisation of Nepali politics which has its own consequences for Nepal’s development potentials. Our political economy exploration in historical context suggests that the foreign policies of India and China towards Nepal are unlikely to undergo fundamental change due to the rising economic might of both India and China in the global economy and, consequently, their politico-economic rivalry in South Asia and beyond. This implies that it is only through development-oriented internal political processes that Nepal can hope to unleash its development potential. Additionally, Nepal has to also navigate a path of maintaining relations with both India and China which minimises the negative consequences of their external influences on Nepal’s development process.