Alexander asked during a discussion session last week why industrial development has not occurred in Nepal. I, who graduated with a degree in chemical engineering from the University of California, Berkeley and was visiting Nepal for a few weeks, gave a brief answer to his question.

Time was short. I said that the main reason behind the failure of industrial development is Nepal's long economic-political history and the foreign investment and trade policy adopted by Nepal.

Alexander shook his head. We moved on to other topics and questions. That question from Alexander, the son of the famous American writer Danielle Trussoni, did not leave me. I think this question belongs to all of us. The 'tariff war' started by US President Donald Trump in world trade has made this question and topic important for everyone. In this article, I will seek a somewhat longer and more systematic answer to Alexander's question.

We are trying to address the Gen-G rebellion through elections to overcome the extreme suffering and directionlessness of this country for four decades. But those who want to rise to leadership on this pretext should be able to address the dreams of the younger generation from an economic perspective. That means increasing production in this country. American Congressman Barber B. Connable became president of the World Bank Group in 1986. The following year, in June 1987, he chose industrialization and foreign trade as the main theme of the tenth World Development Report. When Connell, a three-time US senator, signed the tenth World Development Report on June 1, 1987, Nepalis were subjects. King Mahendra had an autocratic Panchayat system. The industrial situation was backward and limited. Most industries were focused on agricultural product processing, textiles, and small-scale production. The country was weak in terms of infrastructure for industrial development, lack of skilled manpower, lack of capital, and raw materials and technology. The simple problems of an import-dependent economy were our obstacles.

Although by that time, some industries had already been established in Nepal. For example, Biratnagar Jute Mills was established in the 1930s, which is one of the oldest industries in Nepal. There were industries such as Bansbari Leather and Shoe Factory, Hetauda Cement Factory, Janakpur Cigarette Factory, Nepal Tea Development Corporation and Nepal Industrial Development Corporation. These industries were mainly focused on the production of goods such as jute, textiles, cement, leather and food processing.

The government had started introducing various policies and incentive programs to encourage industrialization. But it was limited. Progress was slow. The contribution of the industrial sector to the gross domestic product (GDP) was around 10 percent. Even after four decades, there has been no significant improvement in this percentage. With the restoration of democracy, Nepal embarked on the path of an open economy in 1990. A wave of privatization began. For a few years, we achieved high levels of economic growth. But unfortunately, in 1996, the country entered into armed conflict. After that, due to decades of violence and killings, the Nepali people had to abandon the broad journey of economic growth and prosperity and choose a narrow and safe path for the love of their lives. Many young people and those with potential decided to flee. The state's resources were focused on basic security and protection of livelihoods. The overall economy and development efforts were stalled.

While the world economy was advancing at an unprecedented pace, we were deprived of moving forward in a rhythmic manner. The opportunity to become a strong economy and a prosperous nation slipped from our hands. Now a different time has begun. The era of simple and easy world trade, as outlined by Coneball in the Tenth World Development Report, is now over. A close example of this is the failure of Nepal to renew the Trade and Investment Framework Agreement (TIFA) with the United States in 2011. Nepal has been unable to even initiate the renewal of TIFA, which expired last month. TIFA's original objective was to promote trade, investment, and economic cooperation between Nepal and the United States. Not only that, it was also providing a platform for regular dialogue between the two countries on trade and investment-related issues. What this indicates is that countries like Nepal will have a tough time industrializing and developing through foreign trade and investment.

In order to connect with the international economy and benefit from it, there is a preconceived notion that developing and underdeveloped countries should have easy access to the markets of large and developed economies by making them trading partners. After World War II, countries went into industrialization. Their economic expansion was supported and facilitated by significant global liberalization. Developing countries that adopted an outward-looking policy benefited significantly from this liberalization. However, by the 1970s, the pattern of comparative advantage began to change. Developing countries, in particular, challenged the traditional industrial sectors of developed countries. This gradually gave rise to a ‘new protectionism’. Under which developed and large countries began to take various steps to control access to their markets, mainly through non-tariff barriers. Such steps began to reduce productivity in various developing and early-stage industrializing countries and hindered economic growth.

At the same time, there were also attempts to reverse global protectionist pressures. International multilateral institutions began to work to raise hope. Liberal leaders like Coneball continued to work to ensure that a strong commitment by all governments to an open multilateral system, led by the world’s major trading nations, was needed to transform hope into reality. But by today’s date, many changes have occurred in the world order. An era of generosity, cooperation, and hope has come to an end.

Now let’s talk about something domestic. Practically, we are in the early stages of development. For us, industrialization is one of the main means of improving the standard of living. Therefore, the state should play an active role in promoting industrialization. But how can that be possible in today's global environment? This is our practical question, it is necessary to find a technical answer.

Studies suggest that a country like Nepal should adopt a policy of integrating its industrial sector into the international economy through trade. But that will be difficult in the coming days. The state does not have the necessary capacity to hold trade discussions with large and developed countries. Due to which it is not possible to truly compete. Successful countries have often adopted such policies on trade, exchange rates, and related issues that facilitate increasing industrial production and taking it to the international market. They have struck a balance between protection and encouragement.

But what we need to pay attention to is that the main objective of economic development is the welfare of the poor and addressing poverty. In the long run, the benefits of economic growth often spread throughout society and benefit even the poorest members. But income distribution can be uneven in the early decades of development. Since the industrialization phase in Nepal could not even begin, the country did not have the opportunity to move on the path of wealth creation. Whatever progress we have made in the last four decades is based on foreign aid, loans and remittances. We have also benefited from the leaps made by technology in the global market in recent times. But this is not the fruit of our honest efforts and hard work. Therefore, if someone argues that this or that progress has been made, he has not taken into account world trade, production and international structures. Yes, on the surface, we seem to have progressed further than in 1987. But in essence, Nepal neither produces anything special, nor has it done anything that has a monopoly on technology. This country is still dependent today. Dependence is not bad. But for this, the role of external factors and factors is more decisive .

According to the Economic Activity Report of the Nepal Rastra Bank published some time ago, the average capacity utilization of industries across the country in the fiscal year 2081/82 was 44.5 percent. Compared to the previous fiscal year, the average capacity utilization of industries in the last fiscal year was 3.8 percentage points lower . In developed countries with industrial development, it is found that the capacity utilization of industries is 75-85 percent. The message given by this data is that our efforts for industrial development in the country are not sufficient . If this trend continues, the country's economy will weaken . Industrial operation and production are not just empty matters . It is directly linked to employment, income and economic progress . Moreover, industrial development is indispensable for the utilization of the energy produced and achieving economic growth from it .

Kantipur Daily has drawn the attention of the government and the state to stop the youth forced to go abroad in search of employment through its editorial ‘Declining production in industry, growing economic problems in the country’ (Push 22, 2082). But the attention of the state is an abstract thing. The ones who pay attention to this ‘attention’ are the bureaucracy sitting in Singha Durbar, politicians who claim to run the country, and personalities from the private sector. Unless this group makes sincere efforts to solve the country’s problems, no practical improvement can be achieved.

Coneball, who provided leadership based on human-centered and environmentally friendly economic development, considered global poverty a ‘moral insult’. During his tenure, the World Bank’s main objective was focused on poverty alleviation. For this, he prioritized investment in human resources such as health and education. As the first World Bank president to make environmental protection an integral part of development, he established the Department of Environment in 1987, acknowledging past mistakes. Which the current American leadership completely rejects. This also indicates how difficult the coming days will be for a poor country like Nepal. Coneball adopted a policy that women's participation is indispensable for the effectiveness of economic programs. He said that the role of private initiative and entrepreneurship is important for sustainable economic growth.

The World Bank, which Coneball led and reformed, has not changed much in its assistance to Nepal even today. But there have been unimaginable changes in the global environment and politics. Nepal does not have a leadership that can understand this time and set domestic economic and political guidelines. Old and new faces all talk programmatically and are obsessed with extremely personal ambitions. That is why Nepali society does not have a leader. There is no leadership. This void is being filled with passion, anger, and violence.

We are trying to address the Gen-G rebellion through elections to overcome the extreme suffering and directionlessness of the country for the past four decades. But those who want to rise to leadership under this pretext should be able to address the dreams of the young generation from an economic perspective. That is, production in this country should be increased. This requires investment and an environment. To ensure that, it is necessary to create an environment of trust. To create an environment of trust, first of all, there should be discussion in society and equality should be established.

I have added many topics here in search of an answer to Alexander's question. Now I will talk about some of Nepal's constraints. If we look closely at the history of our industrialization, it started later than in neighboring countries. From 1846 for more than a century, the Rana rulers emphasized the policy of keeping the country away from external influences. This policy of theirs prevented the arrival of foreign investment and modern technology. यस अवधिमा नेपालले उद्योग तथा उत्पादनलाई अगाडि बढाउन पनि सकेन । किनभने समाजको उच्च वर्ग विदेशी वस्तु तथा उपभोगमा लिप्त थियो । जसले सानातिना उत्पादनका प्रयासलाई पनि पतनतर्फ धकेल्यो । अर्कोतर्फ मुलुकको भौगोलिक बनावटले औद्योगिक विस्तारलाई अत्यन्तै महँगो र जटिल बनाएको छ । समुद्रमा पहुँच नहुनुका कारण कच्चा पदार्थ आयात र तयारी वस्तु निर्यातमा लागत अन्य मुलुकको तुलनामा अत्यधिक बढी छ । दशकौंसम्मको ऊर्जा संकट (लोडसेडिङ) र महँगो विद्युत् शुल्कले उद्योगहरूको उत्पादकत्वमा गम्भीर असर पारेको छ । राजनीतिक अस्थिरता प्रमुख चुनौतीका रूपमा रह्यो । पछिल्ला चार दशकमा नेपालले धेरै राजनीतिक प्रयोग गर्‍यो जसको मूल्य हामीले चुकाउनुपर्‍यो ।