WTO and globalisation How Nepal can prepare for the challenges

Bhavani Dhungana

In Nepal, it is urgent to make national efforts to boost competitiveness of all types of enterprises.

Nepal has now become a full member of the World Trade Organisation (WTO). While it is definite that the country could gain tremendously from its membership, but this would largely depend on the national capacity to strengthen its competitive position at the world market. How much Nepal can achieve in this aspect, how the policy interventions of the government would help and how the Nepali private sector would strengthen its capability to compete and meet international standards, are big questions. At a time when new economic sectors are being opened for international competition, it is highly desirable that critical aspects of the question of nation’s capability building should be reviewed and assessed. It is essential to prepare Nepal’s international trade and marketing position through a concerted and coordinated approach by forging public and private sector cooperative endeavours for the evolution of coherent and pragmatic trade and investment strategies.

The global economy is fast changing with indications of positive development in 2004 in the economic and trade areas, but most of the LDCs remain in a precarious stage. The main question is how a new round of negotiations could start earnestly and WTO live up to the development promise and how a LDC such as Nepal could improve its national position for international trade. Competitiveness is the keyword these days and in the absence of competitive strength, nations will lag behind and economies will remain marginalised. Therefore, in meeting the challenges of competitiveness, societies everywhere should continually seek coherent strategies to integrate into the global and regional systems efficiently, and on terms that suit one’s economy and promote sustained growth. In a country such as Nepal, the growth should especially benefit the poor. Government is the binding agent of this strategy. It describes the way in which the main players in society, governments, business and civil society, can align their agendas and manage their society for their individual and collective benefit.

In several countries, a number of business sectors, governments, trade unions and NGOs are working together already to lead the way in making their societies and economies as one of the winners of globalisation. Unfortunately many LDCs, including Nepal, have not been able to move in tandem with those calls of the modernisation and socio-economic transformation. Petty squabbles, quarrels, and vested interests have distorted and misguided national priorities. Collectively, everyone must work for the nation’s priorities and strengthening of competitiveness not only in the trade areas, but also in major economic sectors. Building up of competitiveness needs concerted national efforts and long-term vision. Nepal is passing through a period of challenge and of choice. A challenge to design a new development strategy, including critical review of its trade policy aimed at improving the climate for investment, building up of competitiveness through trust and confidence of the private sector and broadening of social inclusion in development process and benefits.

A choice to remain within global and regional economic framework with appropriate policies and institutional functioning for private sector-led growth or to be marginalised and be stagnant and remain least developed. Thus, it is obvious that improvement in competitiveness, including competitiveness in the trade area, is a must for Nepal and needs to be promoted with active support and involvement of the private sector and NGOs and civil society at large. Especially when Nepal has become a full member of WTO and also actively pressing for membership in other sub-regional organisations, how can Nepal develop its trade competitiveness? It is essential that Nepal identifies its niche areas where it can promote and strengthen its competitiveness. Nations which have effective public-private sector cooperation and partnership have benefited. But several least developed economies have not been able to do so. Therefore, poverty remains entrenched. Unemployment has increased. Economic and social development has lagged. Ultimate results are domestic disturbances and violence, civil strife and growing public disenchantment.

In Nepal, it is therefore urgent to strengthen national efforts in building capabilities for competitiveness of all types of enterprises. Institutions need to be strengthened for requisite skills development. There are other aspects of critical importance, but it needs to be stressed that technological up-gradation and capability building in Nepal call for an accentuation of the level of and shifts in the pattern of human resources development. Skill requirements in industry, trade, in service institutions, in governmental organisations and other enterprises will grow and must be treated as key prerequisites for the nation’s overall progress and prosperity. Development of human resources cannot be treated as a residual matter in the development process and has to be “tagged on” to the advancement of technological capabilities. Building up of infrastructure facilities and strengthening of governmental services, including services in the financial sector, as well as entrepreneurship development call for urgent attention. Dr Dhungana is a retired UN official.