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Foreign Investment in a Least Developed Country: The Nepalese Experience

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  • Prema-chandra Athukorala
  • Kishor Sharma

Abstract

This paper aims to contribute to the literature on the developmental role of foreign direct investment through an examination of the Nepalese experience during the period 1988- 2001. Despite significant liberalisation of the foreign investment regime and the introduction of attractive investment incentives, Nepal’s achievements during this period, both in terms of the volume of FDI and its developmental impact, failed to mach the national expectations. Nepal obviously has intrinsic disadvantages arising from its geography and other typographical characteristics in attracting FDI. However, comparative international experience suggests that her lackluster achievements as a host to foreign investors cannot be explained in terms of these factors alone. Policies that underpin the overall investment climate also seem to matter. Mere liberalisation of the investment regime and introducing financial incentives are not a substitute for an all-encompassing effort to improve the investment climate.

Suggested Citation

  • Prema-chandra Athukorala & Kishor Sharma, 2004. "Foreign Investment in a Least Developed Country: The Nepalese Experience," ASARC Working Papers 2004-05, The Australian National University, Australia South Asia Research Centre.
    • Handle: RePEc:pas:asarcc:2004-05
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    References listed on IDEAS

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    6. Sharma, K., 2000. "Liberalization and Structural Change: Evidence from Nepalese Manufacturing," Papers 812, Yale - Economic Growth Center.
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