The Nepalese economy has experienced several structural breaks over the last century, causing uneven trends. These breaks are often tied to significant political, social, and economic changes. Here are some key structural breaks:
- Rana Rule and Its End (1846-1951)
- Era of Autocracy: During the Rana regime, Nepal was an isolated and autocratic state, with minimal focus on economic development and modernization.
- End of Rana Rule (1951): The overthrow of the Rana regime opened Nepal to modernization efforts, international aid, and development programs.
- Democratic Movement and Monarchy (1951-1990)
- Political Instability: The period saw numerous changes in governance structures, with alternating periods of democracy and direct monarchical rule, affecting economic policies and development continuity.
- Development Programs: Introduction of planned economic development with the first five-year plan in 1956.
- Panchayat System (1960-1990)
- Controlled Economy: Under King Mahendra’s Panchayat system, the economy remained heavily regulated, with limited private sector growth.
- Infrastructure Development: Some focus on infrastructure development, but political repression and lack of inclusive policies hindered broad-based economic growth.
- Democratic Reforms and Liberalization (1990-2006)
- Restoration of Democracy (1990): Marked a significant shift towards a more open and market-oriented economy.
- Economic Liberalization: Efforts to liberalize the economy, attract foreign investment, and promote private sector growth.
- Maoist Insurgency (1996-2006)
- Conflict Period: The decade-long Maoist insurgency caused significant economic disruptions, with destruction of infrastructure and decline in investment.
- Peace Agreement (2006): The signing of the Comprehensive Peace Accord ended the conflict, allowing for a focus on reconstruction and development.
- Federal Democratic Republic and Post-Conflict Reconstruction (2008-Present)
- Abolition of Monarchy (2008): Transition to a federal democratic republic aimed at decentralizing power and promoting inclusive growth.
- Earthquakes of 2015: Major earthquakes caused significant economic setbacks, with a focus on reconstruction and resilience building in the aftermath.
- Political Instability: Frequent changes in government and political instability have continued to affect economic policies and implementation.
- COVID-19 Pandemic (2020-Present)
- Global Pandemic: The COVID-19 pandemic had a profound impact on the Nepalese economy, disrupting tourism, remittances, and domestic economic activities.
- Recovery Efforts: Ongoing efforts to recover and build a more resilient economy in the face of global uncertainties.
These structural breaks have caused fluctuations in economic growth and development, leading to an uneven economic trajectory over the last century.
