Group ‘B’

4. Explain competition law in the context of Nepal on the basis

of economic analysis of law.
5. Why GNP is greater than GDP in the context of Nepal?
The explanation of the difference between the values of GDP and
GNP for developing countries like Nepal is easily gathered from the
standard definition of the two measures:
 GDP, which means Gross Domestic Product, is the overall
value of finished goods and services produced within
the geographical boundaries of a country, irrespective of the
producers’ nationality;
 GNP, which define Gross National Product, is the overall
value of goods and services produced by a
country’s nationals, irrespective of their geograpical location.

It is immediately apparent from the definitions that whenever the

GDP exceeds the GNP we are facing a country that does not export
capital, i.e. a country that has accumulated comparatively less
capital than others and therefore is at the receiving end of direct
investment or financial investment.
Developing countries like Nepal have a lot of foreign direct
investment increasing their GDP and a few of their factors of
production are producing away ,It is easy to figure out that capital-
exporting countries, those that normally have accumulated higher
levels of capital, invest abroad so that, directly by setting up
factories or other industrial and commercial enterprises, or
indirectly by just buying foreign currency, deposits or debt, increase
or facilitate the economic activity in the foreign country.
Therefore, we can conclude that due to numerous foreign direct
investment GDP of Nepal is greater than GNP .
3. What is the function of liberalization in the context of developing
countries like Nepal?

In developing countries, economic liberalization refers more to

liberalization or further "opening up" of their respective economies
to foreign capital and investments. It is the lessening of government
regulations and restrictions in an economy in exchange for greater
participation by private entities; the doctrine is associated
with classical liberalism.
The function of liberation in the context of Nepal are as follow.

Removing Barriers to International Investing

Investing in emerging market countries can sometimes be an
impossible task if the country you're investing in has
several barriers to entry. These barriers can include tax laws,
foreign investment restrictions, legal issues, and accounting
regulations, all of which make it difficult or impossible to gain access
to the country.

Unrestricted Flow of Capital

The primary goals of economic liberalization are the free flow of
capital between nations and the efficient allocation of resources
and competitive advantages. This is usually done by reducing
protectionist policies such as tariffs, trade laws, and other trade
barriers.

Political Risks Reduced

Liberalization reduces the political risk to investors. For the
government to continue to attract more foreign investment, areas
beyond the ones mentioned earlier have to be strengthened as well.
These are areas that support and foster a willingness to do business
in the country, such as a strong legal foundation to settle disputes,
fair and enforceable contract laws, property laws, and others that
allow businesses and investors to operate with confidence.
Diversification for Investors
Investors can benefit by being able to invest a portion of their
portfolio into a diversifying asset class. In general, the correlation
between developed countries such as the United States and
undeveloped or emerging countries is relatively low.

The Bottom Line

Economic liberalization is generally thought of as a beneficial and
desirable process for emerging and developing countries. The
underlying goal is to have unrestricted capital flowing into and out
of the country to boost growth and efficiencies within the home
country. 

Stock Market Performance

In general, when a country becomes liberalized, stock market values
also rise. Fund managers and investors are always on the lookout
for new opportunities for profit. The situation is similar in nature to
the anticipation and flow of money into an initial public
offering(IPO).
8. What is the significant of budget deficit? Different
countries are spending huge amount of money to solve this
current problems. Give some examples of different
countries?
A budget deficit is the condition when spending is more
than income. The term budget deficit is mostly applies to
governments, although individuals, companies, and other
organizations.

A budget deficit increases the level of public sector debt.

Large deficits will cause national debt as a % of GDP to increase.
Opportunity cost of debt interest payments. A higher deficit will also
lead to a higher % of national income being spent on debt interest
payments.