FEATURES NEWS THE RISING NEPAL (DAILY)

Industrialisation
For Economic Development

By Uttam Maharjan

INDUSTRIAL development is a measure of a country's economic development. The higher the rate of industrialisation, the higher the level of economic development. The chasm between the haves and the have-nots represented by developed and underdeveloped countries respectively is one of the fallouts of industrialisation.

Irony

Developed countries have adequate resources, skilled manpower, sophisticated technology and high expertise. Their volume of exports is high. So, they are economically developed. On the other hand, underdeveloped countries are poor in resource mobilisation, capital and technology. Rich as they may be in resources, they lack capital and expertise to tap them. A fitting example would be our own country. It is the second richest country in hydropower: not but what, less than one per cent of the total potential of 83,000 MW has been harnessed so far. It is an irony that about 85 per cent of the people are deprived of electricity facilities. Also, the electricity tariffs are one of the highest in the world.

Products from agriculture, animal husbandry, natural resource management and the like are raw materials for industries. Nepal is a predominantly agricultural country with 81 per cent of the population involved in agricultural and allied activities. But lack of sustainable development of the agricultural sector due to problems associated with the inadequate availability of improved seeds, better fertilisers and other inputs, irrigation facilities and the like is a major setback.

In fact, agriculture is a sector that generates inputs for other sectors. In other words, the development of agriculture leads to the development of other sectors. When agriculture itself is on the blink, now can other sectors benefit from it? It is indeed a serious question that must be addressed by policy-makers. The story of animal husbandry is no more different. Likewise, the absence of adequate capital and appropriate technology has made it difficult to harness natural resources that are scattered throughout the length and breadth of the country.

In Nepal, large-scale industries are few and far between. Medium-scale and small-scale industries occupy the lion's share. Carpets, garments, pashmina products, handicrafts and the like are the country's major exportables. But in recent years, these products have shown a downturn in export. European and American countries are the main markets for these products. But the worldwide recession following the 9/11 event has had impact on the export of these products.

Besides, the quality of products and concessions given by importing countries count a lot in export trade. In recent years, pashmina products have somewhat declined in quality and hence their export has dwindled. The export of carpets, like other products, has also declined. India exports low-quality carpets that look like Nepalese carpets in texture at a cheaper price. As people generally prefer low priced goods to high-priced ones, they have gone for Indian products. Nepal has been demanding duty-free and quota-free access of garments to the USA. It may be noted that the USA has given GSP incentives to some African and Caribbean countries but Nepal has been hard pressed to compete with them. Nepalese garments have low competitive edge due to high costs involved. So, lobbying is a exigently required to get concessions in the export of garments and other exportables.
Business entrepreneurs complain that the government's export policy is not salutary for the development of the export sector. A lot of things need to be modified in or incorporated into the export policy. Need for adopting a one-door arrangement to steer clear of administrative hassles, bringing into operation the Birgunj dry port, establishing an export promotion zone, simplifying Nepal-India trade and so on are glaring problems facing the export sector.

Industrial development is the key to Export promotion and import substitution. In a cash-strapped country like ours, import substitution is essential for saving precious funds that may be channelised for development activities. In a nutshell, industrial development props up the economy of a country by building development infrastructures.

The year 2003 is being observed as the Export Promotion Year (EPY) with four salient objectives: to short-circuit procedures for export promotion, to stress the publicity of Nepalese products in the international market, to honour excellent importers and exporters of Nepalese products and to organise trade fairs on a large scale both at home and abroad. In fact, the slogan of the EPY-2003, viz economic growth through exports, is very partinent at a time when economic growth is expected to leave a lot to be desired in view of the prevailing economic indicators. However, the recently announced ceasefire between the government and the Maoists is expected to infuse new blood into the ailing economy.

Logic

Industrialisation has, however, bad effects on the environment. Factories that spew forth noxious effluents are spoiling the fragile environment. Chemical and cement factories and brick kilns, for example, are spoiling the environment. It does not stand to reason, however, that such factories are closed down. By making environmental impact assessment, such factories can be set up in sparely populated or unpopulated areas. Also, the existing factories can be relocated to safety. After all, the goods produced by such factories are necessary goods and there does not exist any logic to deprive people of such products.

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