Economic Prosperity amidst Political Instability

Prakash K. Shrestha, PhD*

It seems that political stability is a far distance dream for Nepal. Despite
being a republic country, the Nepalese politics does not seem to be settled
down in near future, pulling the country down in the ladder of the economic
development. It is a bad fortune for Nepalese people that we are poor and
lack basic modern amenities even in the twenty-first century. Another odd for
Nepal's economic development is that neither political stability nor political
instability has been able to spur rapid economic progress in Nepal. In its
history, Nepal had witnessed more than a century long Rana autocratic
regime, which ended in 1950 and 30 years of party-less Panchayat regime
from 1960 through 1990. Despite the political stability more or less during
that time, economic development didn't kick up in Nepal as it should be.
Nepal was remained under the dark age of Rana rule, while Europe and
America were in full swing of industrial revolution, and there was the
Panchayat system, while East Asian countries were progressing.
Although Nepal has been moving in a right direction in politics, now
transformed from a 250-year monarchical system to republic, political parties
do not seem to be matured enough to govern the country and expedite the
process of economic transformation even after more than two decades of
party politics and armed conflicts. Lack of foresights, narrow visions, and
petty politics have made the political parties defunct to execute the critical
role that the history of Nepal has offered to them. Nepal is in a critical
juncture with a great potentiality to be a star in South Asia. However,
** The New School for Social Research, New York
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growing lack of trust and cooperation among political parties have been
putting off the institutionalizing the nascent republic and the process of
economic development. These political parties unit only when they are in
opposition, but they bicker when they are in power.
It is true that political transformation takes time, and many conflicting things
demand the process of learning by doing. However, in the post-conflict era,
all political parties want to fulfill all their demands immediately, although
some demands are mutually exclusive. This has brought the process of
political transformation in halt, which has impacted development activities
adversely. Even after spending 4 years, the Constituent Assembly failed to
fulfill its mandate of drafting new constitution for Nepal.
Economic development is possible as shown by many advanced and newly
emerging countries. Neoclassical economic theories predict the convergence
among countries in economic development. According to these theories, an
economy can grow by producing outputs by using labor, capital, land and
organization. Neoclassical economists argue that with globalization and
liberalization, capital moves from the advanced countries to labor abundant
developing countries so that economies of these countries should grow.
However, in a broader sense, it is not happening despite the liberalization
and globalization. Among others, political instability seems to be one of the
factors hammering the economic progress. Many studies have found that
political instability hinders the process of development through various
channels such as creating policy uncertainty, increasing risks for investment
and obstructing infrastructure development. What a shame, despite having
tremendous potentiality in water resources given by the nature, Nepalese
people have to live in dark and with a lack of adequate portable water.
The vital role of developmental state has been established by the success of
East Asian countries. Markets cannot function in a vacuum without the
provision of some public goods, and laws and order provided by the
government. But, there is no any easy formula to import and instill stable
governance system in many developing countries like Nepal, although with
the globalization and opening up the economy, a country can bring in
technology and capital from abroad. And, there are no economic theories
that explain economic growth and development in a political quagmire.
There is no dearth of resources for economic development. The donors can
pour aid. In addition, remittance inflows have been providing precarious
foreign exchanges necessary to import capital and technology necessary to
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speed up production in recent years. Many domestic and non-resident Nepali

are ready to invest in the Nepalese economy. Moreover, Nepal can easily
attract foreign direct investments because of having great potentiality in
hydropower and tourism, and being in a strategic location between two
growing nations China and India. People are vying for uplifting their living
standard. Despite this, the ongoing political conundrum has been keeping
Nepal as a hostage to start off economic prosperity.
Seeking to get power is a normal behavior for political parties. But,
preventing to do own business and economic activities by calling frequent
bandh and obstructions are not justifiable and tolerable. Despite civil wars,
America had paved the way for economic prosperity by intensively engaging
in economic activities and building up infrastructure. Political parties could
differ in principles and could play tricks to get the power, but they should
have a common agenda for economic development, which is vital not only
for them but also for future generations. As we hate Rana Regime and
Panchayat now because they had kept us poor, future generations will hate
present political leaders no matter how many times they become prime
minister and minister.
For a country's development, everyone should play a role. In recent years,
actors other than politicians have been discharging their own duties. For
example, farmers are doing farming, writers and journalists are busy in
making people aware, and actors and actresses are discharging their role
and making people happy even in the gloomy political milieu. Intellectuals
and businessmen are aspiring to do their own role. However, political leaders
are failing to fulfill their own duty and politicizing the every sphere of life. For
example, there are trade unions even in government offices belonged to
each political party, stifling the development of professionalism.
It is obvious that it is not easy to make a transition to a modern democracy.
Political instability is a feature of transition. However, nearly all stable
democracies have emerged from successful economic transitions. Hence,
let's not obstruct the economic progress but facilitate developmental
activities. It will help to solve some conflicting political demands that have
been put forwarded right now. Economic prosperity could be possible amidst
political instability, which may finally bring political stability, if political
parties just narrow down their role to politics and play their own role of giving
constitution, laws and order, and peace in the country.