Can Nepal Join Asian Century? – Analysis


In 1993 Oxford University Press published a remarkable book for the World Bank –The East Asian Miracle. It described how most East Asian countries gained unusual growth rate in a short time mainly due to superior accumulation of physical and human capital and invested them in their economy following better skill and updated technology. That was later followed by China in 1980s, India and Indonesia in 1990s – that brought phenomenal economic rise in Asia. The speed and scale of this rise, according to Brahma Chellaney, has no parallel in world history. And “with the world’s fastest-growing economies, fastest-rising military expenditures, fiercest resource competition, and most serious hot spots, Asia obviously holds the key to the future global order”, that somehow has been claimed as Asian Century by many intellectuals .

According to an acclaimed ADB publication -Asian Development Outlook 2012, while economic growth in South Asia was picking up around 6.4 in 2011, Nepal’s growth rate was dipped to mere 3.5 % during the same period and more or less remained at the same for some years. Another noted ADB report -Asia 2050 – Realizing the Asian Century – says , Asia is in the middle of historic transformation and following its growth trajectories by 2050; per capita income in Asia could rise six fold in purchasing power parity (PPP) to reach Europe’s level today. “It would make some 3 billion additional Asians affluent by current standards. By nearly doubling its share of global gross domestic product (GDP) to 52 percent by 2050, Asia would regain the dominant economic position it held some 300 years ago, before the industrial revolution.

Institutions matters in managing the change and help people combat the possible economic vulnerabilities and catastrophes that create chain of poverty and deprivation among people. It is the institutional capacity of the country that fights against poverty, economic stagnation and socio-political uncertainty but promotes growth and development. But unfortunately, we lack basically formal institutions and also have weakened informal institutions that enhances freedom of people, strengthens the rationality of their mind and creates new ideas in them. Furthermore, quite naturally institutions help people develop presence of their mind to interpret those ideas and bring them in actions to resolve the problems and meet the challenges they are living with.

Development fails when people are weak and lack institutional supports and institutions fail to represent them. Interactions among people in institutions and among institutions make people stronger and provide stimulus of growth. They also help people acquire knowledge and skills, invest them in economy and enhance the productivity of the work force.

Nepal for more than a decade is at heavy odds from Maoist insurgency and external interferences to some kind of state failure. The country has ended up with many formal and informal institutions that had been joining Nepali society for centuries. The socio-economic life of Nepali people that was being governed by some common customs, traditions, social norms, culture and religion, have been tarnished and shattered. Although they impede the speed of change that prevents many promising economic opportunities for them with more advanced knowledge-based growth, but those institutions that were developed over centuries could not be replaced with the modern ones but left vacant. Our economy and our society barely survived but could not make strides while located between two thriving economies.

Can Nepal join Asian Century?

The compelling challenge remains: in an era of globalization, a country whether small or big cannot grow and succeed until its economy is integrated with global economy. Successful economy not only gives national dignity and honor but also global recognition and national security as well. On the milieu of this, unless we transform our formal and informal socio-economic institutions from rural level to national level, enhance and improve their outputs, we cannot join the Asian boom.

It can be begun from institutional facilitation for quality products at any level, standardize them, promote rural investment, and nurture rural human capital for better quality outputs for exports and ultimately rural transformation. By integrating rural trades existing among local communities with national or cross border trade, we can create new jobs, gradually modernize our economy and become part of Asian Century.

Economy of a nation starts with individual and community and without commitment and capacity to run and own economy from local to national level, a nation cannot move ahead. But such capacity and commitment depends upon the economic connections among communities and state facilitation to reinforce mutual benefits. This will strengthen both the demand and supply side of the economic growth and development.

Similar is the case with regional development. Regional approaches, regional thinking and learning from each others have accelerated growth and development in many parts of the world. A brilliant success story near to us is ASEAN and again in SAARC we have a failure story.

South Asia from Afghanistan to Burma including China has tremendous economic opportunities for all the countries in region. If institutional framework to work together with joint initiative to develop and share the opportunities available to them is built to exploit the huge resource potential from water to minerals and tourism available in the region, the region is sure to become a great hub of international trade bringing huge developmental achievement and prosperity in this part of world. But without any such strong bond of economic integration among nations across the Himalayas, the buzz of word of Asian Century may just become a high sounding intellectual rhetoric.

Obviously, Nepal cannot become an exception among the comity of nations. Only we are yet to realize the basics that development and prosperity starts with people – with their knowledge and skill, their work ethics, productive culture, well-developed and well connected capital markets that is supported by the rule of law, stable and accountable government. A vibrant private sector with partnership with public sector not inhibited by political corruption but driven by adaptive efficiency of their industrial and business houses can make it possible within a short span of time.

Besides we need a strong national will to confront institutional decay at all level, maintain institutional checks and balances, develop developmental infrastructures, institutionalize strong anti corruption bodies to end political protection to criminal elements that are sucking the health of economy. It seems a long list of to do agendas, but we can succeed if we can make some efforts in finding few leaders to lead us with clear vision and clean hands. The strengths we have will be an asset.

Good Neighborhood: A Good Insurance To Asian Century

In Project Syndicate Brahma Chellaney says that to stand tall to Asian Century, Asia “must cope with entrenched territorial and maritime disputes” that is weighing down its “most important interstate relationships; increasingly fervent nationalism; growing religious extremism; and sharpening competition over water and energy.” Besides, Asian “political integration badly lags behind its economic integration, and, to compound matters, it has no security framework. Regional consultation mechanisms remain weak.”

Indian Foreign Secretary Ranjan Mathai releasing a book on India’s Neighbourhood: Challenges in the Next Two Decades – on July 13 admitted that although the “discernible eastward shift of global political and economic centres of gravity” has increased Asian weight and profile in international relations, this has also “created unprecedented challenges for policy makers and strategic establishments that have to grapple with difficult and often unfamiliar problems”.

Mathai during his key note address confessed that the challenges they are facing cannot be overcome by any one organization but by a web of multiple strands of thought, multiple perspectives and multiple courses of action woven together into composite solutions. And the book – the first such a document prepared by MEA-IDSA Strategic and Perspective Planning Research Group was to peer “the other side of the hill” with intentions to provoke a lively debate – “both within India and beyond its borders” in India’s “forward-looking and proactive approach to engaging with our neighbours”.

“The promotion of a politically stable and economically secure periphery is a paramount foreign policy objective for India” Mathai has explicitly stated and urged to work hard to foster “inter-connectivity and mutual confidence in multiple areas, in promoting trade and investment, and in trying to leverage India’s rapid economic growth into win-win arrangements” with its neighbours.
“India will need to review its policies and take steps to correct the existing impression as an interfering neighbour . . . continued uncertainty in Nepal could push it into a deep crisis. . . India will also need to shield its own Nepali speaking areas from instabilities in Nepal . . . craft policies that would mitigate the negative effects of an unstable Nepal and the growing influence of China” the book has plainly admitted.

There is nothing much to disagree with either with Mathai or with the gist of the book, however they are yet to realize how India has always tried to overuse its overwhelming geo-political weight in Nepal and has forced Nepal plunged deep into crisis and seemingly endless political mire that the country is living with. Undoubtedly S.D. Muni’s recent revelation and Pranab Mukharjee’s interview with Al Jajeera mustn’t have gone unnoticed by both Mathai and IDSA team that completely belies to what they have admitted.

“We do not apply 20th century solutions and mindsets to 21st century problems” Mathai said but in Nepal people have a common feeling that India is applying 19th Century mindset to solve the problems of an Asian Century.
This article appeared at The Reporter Weekly ( July 23-29, 2012) and is reprinted with permission

Keshav Prasad Bhattarai

Keshav Prasad Bhattarai is the former President of Nepal Teachers' Association, Teachers' Union of Nepal and General Secretary of SAARC Teachers' Federation. Currently, he is the Advisor of Nepal Institute for Strategic Affairs (NISS). Mr. Bhattarai has also authored four books -- two of them are about Nepal's Relations with India and one each on educational Issues and Nepal in global Geopolitics.

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