World Bank Group2014-09-122014-09-122014https://hdl.handle.net/10986/20098Nepal needs a new economic model to achieve faster and sustained growth as well as further improvements in human development and poverty outcomes. Economic growth, while ro¬bust at around 4 percent annual average since 2005, is far from the level needed to achieve the government s ambitious targets. The economy, highly dependent on remittances, lacks the nec¬essary dynamism. While substantial gains have been made to reduce poverty and expand access to services, achieving further progress will require more determined and targeted state intervention. To redefine Nepal s growth model, public policy should focus on 3 I s: Investment, In¬frastructure, and Inclusion. Investment is the bedrock of a sustainable growth model but in Nepal, the state, firms and households critically under-invest, with gross fixed capital formation between 19.9 and 22.2 percent of GDP over the past decade (compared to 30 percent or more in fast-growing countries in East Asia). In order to unlock investment as well as to expand access to services and opportunities for all, public infra¬structure is critical, but Nepal is under-connected and under-powered. Finally, growth alone will not deliver continued fast progress on inequality and poverty reduction unless the growth model is calibrated for inclusion, which in turn can help sustain dynamic growth.CC BY 3.0 IGOACCESS TO SERVICESACCOUNTINGAGRICULTURAL DEVELOPMENTAGRICULTURAL INPUTSAGRICULTURAL PRODUCTIVITYAGRICULTURAL SECTORAIRASSET MANAGEMENTBALANCE OF PAYMENTSBANKING CRISISBANKING SECTORBANKING SYSTEMBENEFICIARIESBETTER ACCESS TO MARKETSBOTTLENECKSBRIDGEBUDGET SURPLUSBUDGETINGBUSBUS SERVICESCAPITAL ADEQUACYCAPITAL BASESCAPITAL FORMATIONCASH TRANSFERCASH TRANSFERSCONFLICTCONFLICTS OF INTERESTCOST EFFECTIVENESSCOUNTRY RISKSCREDIT GUARANTEECREDIT INFORMATIONCREDIT LINESCREDIT REPORTINGCREDIT SQUEEZECURRENCYDEBTDECENTRALIZATIONDEPOSITDEPOSIT INSURANCEDEVELOPING COUNTRYDEVELOPMENT BANKDRIVERSDRIVINGECONOMIC DEVELOPMENTECONOMIC DIVERSIFICATIONECONOMIC GROWTHECONOMIES OF SCALEELASTICITYEMERGING ECONOMIESEQUITY INSTRUMENTSEXCESS LIQUIDITYEXCHANGE RATEEXCHANGE RATESEXPENDITUREEXPENDITURESEXPORT PERFORMANCEFINANCE INFRASTRUCTUREFINANCIAL CRISISFINANCIAL FLOWSFINANCIAL INSTITUTIONFINANCIAL INSTITUTIONSFINANCIAL MANAGEMENTFINANCIAL PERFORMANCEFINANCIAL STABILITYFINANCIAL SUSTAINABILITYFINANCIAL SYSTEMFIXED CAPITALFOREIGN DIRECT INVESTMENTFOREIGN EXCHANGEFOREIGN INVESTMENTFOREIGN INVESTORSFUELFUEL SAVINGSFUELSGOVERNMENT GUARANTEEGOVERNMENT GUARANTEESGOVERNMENT INVESTMENTGROSS DOMESTIC PRODUCTGUARANTEE FUNDHUMAN CAPITALHUMAN CAPITAL DEVELOPMENTHUMAN DEVELOPMENTHUMAN DEVELOPMENT INDEXHUMAN RESOURCESIMPACT ON POVERTYINCOMEINCOME DISTRIBUTIONINCOME GROWTHINCOME INEQUALITYINCOME TAXINDEBTEDNESSINDICATORS OF POVERTYINFLATIONINFORMATION SYSTEMINFRASTRUCTURE DEVELOPMENTINFRASTRUCTURE INVESTMENTINFRASTRUCTURE PROJECTSINTERNATIONAL AIRPORTINTERNATIONAL DEVELOPMENTINTERNATIONAL FINANCEINTERNATIONAL POVERTY LINEINTERNATIONAL SETTLEMENTINVESTINGINVESTMENT ACTIVITIESINVESTMENT CLIMATEINVESTMENT OPPORTUNITIESINVESTMENT POLICYINVESTMENT RATEIRRIGATIONLABOR MARKETSLAND TRANSPORTLAND USELAND VALUELEASE AGREEMENTLEGAL FRAMEWORKLIQUIDITYLIQUIDITY CRISISLIVING STANDARDSLOCAL GOVERNMENTLOCAL INFRASTRUCTURELONG TERM ASSETMACROECONOMIC ENVIRONMENTMARKET ACCESSMARKET STRUCTUREMICRO FINANCEMOBILITYMONETARY FUNDNATIONAL SAVINGSNON PERFORMING LOANSNPLOLD-AGE PENSIONOPPORTUNITY COSTOPPORTUNITY COSTSOUTPUT LOSSPARTIAL RISKPAYMENT DEFAULTPAYMENT SYSTEMPEAK DEMANDPEDESTRIANPEDESTRIAN INFRASTRUCTUREPER CAPITA CONSUMPTIONPHYSICAL ASSETSPOLITICAL STABILITYPOORPOOR POLICYPOPULATION GROWTHPORTFOLIOPORTFOLIO DIVERSIFICATIONPOVERTY ERADICATIONPOVERTY ESTIMATESPOVERTY GAPPOVERTY IMPACTPOVERTY LEVELSPOVERTY LINEPOVERTY RANKINGSPOVERTY REDUCTIONPRIVATE CAPITALPRIVATE FINANCINGPRIVATE INVESTMENTPRIVATE INVESTORSPRIVATE TRANSFERSPUBLIC FINANCESPUBLIC INVESTMENTPUBLIC TRANSPORTPUBLIC WORKSPURCHASING POWERQUALITY OF TRANSPORTQUALITY OF TRANSPORT SERVICESRATES OF RETURNRE-INVESTMENTREAL INTERESTREAL INTEREST RATESREMITTANCEREMITTANCESREMOTE REGIONSREPAYMENTRESERVERETURNSRIGHT OF WAYRISK AVERSIONROADROAD NETWORKROADSRURALRURAL AREASRURAL DEVELOPMENTRURAL ECONOMYRURAL INCOMERURAL PHENOMENONRURAL WATERRURAL WATER SUPPLYSAFETYSAFETY NETSAFETY NETSSANITATIONSOCIAL IMPACTSSOCIAL POLICIESSOCIAL SAFETY NETSSOLVENCYSTATE GUARANTEETARGETINGTAX RATESTELECOMMUNICATIONSTERMS OF CREDITTERRORISMTRAFFICTRAFFIC MANAGEMENTTRANSACTIONTRANSACTION COSTSTRANSPARENCYTRANSPORTTRANSPORT FACILITIESTRANSPORT INFRASTRUCTURETRANSPORT INVESTMENTTRANSPORT INVESTMENTSTRANSPORT SECTORTRANSPORTATIONTREASURYTRIPTRUETRUST FUNDURBAN TRANSPORTVILLAGE DEVELOPMENTWALKINGWARWITHHOLDING TAX10.1596/20098