Prosperity is often spoken of as an aspiration, but its meaning is concrete. It is the ability of a nation to produce more and turn that wealth into better schools, better health care, stronger infrastructure, and real opportunities for its people. Without it, even the most basic needs collapse under the weight of scarcity.It allows a country to expand its productive capacity and raise living standards. It is what transforms national hope into national capability.
Economic growth is the engine of prosperity. When an economy expands, more people find work, incomes rise, and investment follows. Growth creates the fiscal space for stronger public services that reach everyone. It also carries moral weight: it is the most effective tool for reducing poverty; it gives dignity through employment; it keeps families from being split by migration; and it gives young people a reason to believe they can build a future at home. No force shapes a nation’s destiny more than growth. Yet Nepal’s prosperity has been denied because growth has been too weak for far too long.
How Nepal Ranks
The numbers make this clear. In 1980, Nepal’s average per-person income was roughly on par with China and India at about $450 (in today’s prices). Today, Nepal is stuck near $1,450, while India has climbed to $2,700 and China has surged to $13,000. Nepal’s income rose only threefold over this period, compared with sixfold in India and twenty-nine-fold in China. Put differently: the average income of a Nepali grew by 2.8% a year, compared with over 4% for an Indian and 8% for a Chinese. The more immediate picture is even starker. In the last four years, Nepal’s per-person income has grown at less than halfIndia’s, so it would take twenty-one years for the average Nepali to double income — compared with just ten for an Indian.
This sluggishness is not tied to any single political regime. Nepal grew slowly under all three systems — absolute monarchy, constitutional monarchy, and the republic. Every regime failed to deliver high growth, and Nepal’s relative standing weakened with each one. Economic theory suggests poorer countries should grow faster because they can catch up by using idle labor and capital into production and adopting existing technologies. But Nepal breaks this pattern. At a much lower income, it grew more slowly than neighbors far richer than itself. India and China are ahead and widening the gap every year.
Growth is never a mystery. It depends on two things: how fully a country uses its land, labor, and capital; and how productive its workers are with those resources. A nation seeking prosperity must do two jobs: fully employ its resources and raise labor productivity (the amount of output each worker produces). Nepal has struggled on both. The obvious question is: why?
Why Growth Failed
Take the utilization side first. Capital is badly misallocated—flowing into consumption, real estate, and politically protected activities instead of productive investment. Policies discourage investment and risk-taking, so the private sector hesitates, and government investment is neither focused nor efficiently used. Labor is idle, underemployed, or abroad because the economy does not create jobs, let alone high-paying ones. Land remains unused or trapped in extremely low-productivity, both per worker or per unit of land.
Even when resources are employed, per-person output remains low because workers lack the machinery, technology, skills, and education needed to raise productivity. Without modern tools and methods, they are forced to work with rudimentary techniques. A workforce cannot be productive if its tools and training belong to another era.
These outcomes are not accidental; they are produced by the policies and institutions that shape incentives. Nepal’s institutions were built for political bargaining rather than economic performance, and the priorities of politics crowded out the priorities of growth. When institutions do not reward efficiency, enforce rules consistently, or provide stability, distortions follow. The consequence is straightforward: the engines of growth are underused, and the economy delivers low output because the system governing it is weak. The reason for this institutional failure is not mysterious; it is political.
Behind these weaknesses lies a deeper issue. For decades, national energy has been absorbed by political debates about systems, borders, identities, and transitions, while economic transformation was ignored. These debates, important in their own right, were nonetheless overplayed to the detriment of prosperity. But politics has limits. No political arrangement, however inclusive, can substitute for growth. No constitutional design can deliver prosperity without placing growth at the center of national priorities. Growth is a political choice, and Nepal never chose it as its national mission.
No political party has treated growth with seriousness. All routinely promise double-digit growth—as if it were aslogan—without understanding the policies and discipline required to sustain it year after year. Worse, the long list of items that follows in their manifestos always contradicts the very priority of growth. In Nepal, the growth slogan has become a passing fad—shouted during elections and then locked away until the next.
Nepal’s prosperity was not denied by fate — it was denied by the choices its leaders made.
The Path Forward
What Nepal needs now is not more political haggling but an economic awakening. It cannot afford to treat politics as the main arena of national progress any longer. What the country needs—loud and clear—is prosperity. Without expanding the national pie, every political debate becomes a quarrel over scarcity rather than a conversation about expanding opportunity. Imagine what Nepal lost by not growing. Had it grown at the pace of its neighbors, it would today have far more resources for education, health, and opportunity—and far more jobs for its young people.
Nepal’s prosperity has been delayed, but it does not have to remain so. The country faces a clear choice: remain the poorest nation in one of the world’s poorest regions or commit to the more rewarding path of economic transformation. That path begins with two core priorities that should guide all policy: creating more jobs and raising productivity in the jobs that exist. To achieve this, the private sector must be encouraged—not obstructed—to invest, innovate, and expand. Students need skills, farmers better tools, professionals opportunities at home, and entrepreneurs a clear, predictable environment in which to operate. Policies must ensure that each group has both the opportunity and the motivation to contribute.
The public sector must focus on what it can do well—delivering quality public education, reliable health services, basic infrastructure and a sound business environment—instead of spreading itself thin across sectors and failing all of them. A state that concentrates on core functions creates the foundation for private investment, firm growth, and worker prosperity. Prosperity requires a government that enables, not one that tries to do everything and ends up achieving little.
Nepal does not lack potential; it lacks focus. Countries that rise do so because their leaders concentrate relentlessly on investment, productivity and competitiveness. Nepal can still chart that path—if it chooses a new mindset that places growth at the center of its national mission and commits to it with unwavering resolve.
(The author holds a PhD in Economics, and writes on economic issues in Nepal and Canada. He can be reached at acharya.ramc@gmail.com)