INDUSTRIAL DEVELOPMENT IN NEPAL

MAIN INDUSTRIES DURING THE RANA REGIME

1. BIRATNAGAR JUTE MILL, 1936 2. RAGHUPATI JUTE MILL, 1946 3. MORANG COTTON MILL, 1941 4. MORANG SUGAR MILL, 1946 5. PLYWOOD AND BOBBIN FACTORY 6. JUDDHA MATCH FACTORY, BIRATNAGAR AND BIRGUNJ 1946 7. NEPAL CIGARETTE FACTORY 8. MORANG HYDRO ELECTRIC COMPANY LTD. WITHIN A PERIOD OF 10 YEARS: 63 INDUSTRIAL UNITS WERE OPENED WITH A TOAL CAPITAL INVESTMENT OF Rs. 72 MILLION, OF WHICH NEPALESE INDUSTRIALIST INVESTED ONLY 2 MILLION.

MAJOR INDUSTRIES THAT WERE SET UP WERE:

1. LEATHER, SUGAR, PAPER, CIGARETTE, AGRICULTURAL TOOLS AND TEXTILES. BRICK AND TILES,

2. GOVERNMENT INVESTED IN CEMENT AND SUGAR

Strategy
1. INDUSTRIAL DEVELOPMENT STRATEGY CHANGED AFTER MID 1980s 2. CHANGED TO INDUSTRIES. STATE LED INDUSTRIES TO MARKET LED

3. PRIVATIZATION OF PUBLIC ENTERPRISES.

PERFORMANCE OF MANUFACTURING FIRMS IN NEPAL

SURVEY OF 223 PRIVATE SECTOR MANUFACTURING FIRMS CONDUCTED IN 1999 1. OVERALL MANUFACTURING PRODUCTIVITY IS LOW. 2. LARGE VARIATIONS IN PRODUCTIVITY BETWEEN FIRMS. 3. AVERAGE EFFICIENCY IS HIGHEST IN PHARMACEUTICALS, FOLLOWED BY CARPET AND GARMENT INDUSTRIES 4. PRODUCTIVITY INCREASES WITHL INCREASE IN FIRM SIZE. LARGE FIRMS WITH MORE THAN 500 EMPLOYEES HAVE 25% GREATER EFFICIENCY THAN SMALL FIRMS BELOW 50 EMPLOYEES. 5. CAPACITY UTILIZATION, ECONOMICS OF SCALE, INFRASTRCUTURE AND LEARNING MECHANISM (WORKER TRAINING, FOREIGN INVESTMENT AND TECHNOLOGY TRANSFER OF TECHNOLOGY, TECHNICAL ASSISTANCE, EXPORTING, ETC) ARE DETERMINANTS OF PRODUCTIVITY. 6. EDUCATION, EXPERIENCE, OWING MULTIPLE BUSINESSES WERE FOUND NOT SIGNIFICANT IN DETERMINING PRODUCTIVITY( ENTREPRENEUR CHARACTERISTICS)

7. LIBERALIZATION HAS POSITIVE IMPACT ON EMPLOYMENT GROWTH IN EXPORT-ORIENTED SECTORS 8. FIRMS WERE GENERALLY GROWING FASTER THAN FIRMS WERE FROM OTHER REGIONS OF THE COUNTRY (KATHMANDU). YOUNGER FIRMS GROWING FASTER THAN OLDER FIRMS. 9. LIMITED MOBILITY OF SMALLER FIRMS INTO THE LARGER SIZE FIRMS. 10. DRIVING FORCE FOR GROWTH ARE EXPORTS, WOKER TRAINING ANF FOREIGN OWNERSHIP. THE MANUFACTURING SECTOR THE MANUFACTURING SECTOR HAS BEEN DIVIDED INTO: 1. FOOD, BEVERAGE AND TOBACCO 2. TEXTILE AND GARMENTS 3. CHEMICALS 4. MECHANICAL ENGINEERING 5. ELECTRICAL AND ELECTRONIC CONCLUSIONS 1. MANUFACTRING SECTOR IS SMALL BUT GROWING. ITS SHARE IN GDP IS ABOUT 9% 2. CONSISTS MAINLY OF LIGHT INDUSTRIES. INTERMEDIATE AND CAPITAL GOODS INDUSTRIES ARE FEW BUT ENCOURAGING 3. DOMINATED BY ACTIVVITIES FOOD MANUFACTURING, ESPECIALLY MILLING

4. PRODUCTION PERFORMANCE HAS BEEN MIXED. EXPORT-ORIENTED INDUSTRIES SUCH AS LEATHER AND TEXTILE ARE DECLINING. VEGETABLE GHEE HAS EXPERIENCED GROWTH.
5. OUTPUT VALUE, VALUE ADDED AND FIXED CAPITAL INVESTMENTS ARE INCREASING.

OVERVIEW

GROWTH HAS BEEN A SLOW PROCESS NUMBER OF MANUFACTURING DECLINING IN RECENT YEARS ESTABLISHEMENT HAS BEEN

THE ACHIEVEMENTS OF THE DEVELOPMENT PLANS HAVE BEEN POOR INDUSTRIAL DISTRICTS IN NEPAL HAVE PLAYED AN IMPORTANT ROLE INDUSTRIAL INFRASTUCTURE IS IN A DEVELOPING STAGE IN NEPAL THE ENABLING ENVIRONMENT IS MISSING