Article on Microeconomics in Nepal 1

Written Assignment Unit 1: Article on Microeconomics in Nepal

University of The People

BUS 1103: Microeconomics

Raphael Nelson, Instructor

09 September, 2021
Article on Microeconomics in Nepal 2

Economics as a whole is divided into micro and macroeconomics. Macroeconomics

focuses on a bigger picture while microeconomics focuses on small individual aspects of

economics. Therefore, microeconomics is the branch of the economy that focuses on the

action of individual agents like households, workers, businesses, and so on within the

economy. (Greenlaw & Shapiro, 2018, pa.14). As the economy of a country is determined by

the total of each factor of the economy, the study of microeconomics is crucial in

understanding the economic status of the whole country.

Here in this paper, I am going to present the status of microeconomics in Nepal and its

problems. When I went through the web to search for articles regarding this field, I couldn’t

find many useful articles. Most of the articles were very old and didn’t have adequate

information. A link to one of the useful articles I found is given below

 Provide the link to the article.

https://www.economy.com/nepal/indicators

 Provide a summary of the article.

“Nepal is among the least developed countries in the world with about one-quarter of its

population living below the poverty line.” (Moody Analytics, 2021, p.1) More than 2/3rd

population are involved in agriculture yet Nepal imports most of its food from India. The

whole Nepalese economy depends on remittance and the high potential economic sector isn’t

utilized. Tourism and hydroelectricity production could bring the economic growth of Nepal

to the top of the table. But these sectors are so poorly utilized that even electricity is being

imported in Nepal. The article is full of recent data and information and provides an overview

of the potential of Nepal to exploit its resources to enhance Nepal’s economic growth.
Article on Microeconomics in Nepal 3

The article focuses on data about imports and exports, GDP, CPI, lending, borrowings, and so

on. One of the important aspects to look at is imports and exports. According to reports of the

first quarter of 2021, metrics of import stay at 3,761,276,095 whereas that of export remains

at 297,514,396. This means that the import to export ratio is 12.6: 1. The difference in this

ratio can prove how much Nepal depends on imported goods.

Goods like petroleum products and machinery are essentials because Nepal doesn’t

have enough capacity to produce such products yet. But products that can easily be produced

in Nepal are still being imported like electricity, food crops, and so on.

The main cause of low economic growth is Corruption.

Most of the country's budgets end up in the pockets of politicians and big

businessmen. Every big project gets delayed by years and the cost is more than doubled. If all

the money that the country has would have been used in developing sectors like hydropower

and tourism, Nepal’s economy would have grown exponentially. A country with 43000 MW

capacity of electricity production can’t produce enough electricity to sustain itself.

Hydropower plants are so poorly made that they get damaged each monsoon. Nepal ranks

117 in the corruption index which would be even lower if the data were perfect. There is a

department for anticorruption which is equally corrupted. This has been the primary cause of

failure in economic growth.

This pandemic has become another problem for citizens in Nepal. The necessary

precautions like sealing borders weren’t taken during the initial outbreak of COVID and later

lockdowns were done. Total lockdown happened for nearly a year. This means that

unemployment remains at its peak. The government gives zero to no consideration for

businesses that need to pay their expenses during the time of the pandemic. Most businesses

have permanently shut down and few of the businesses that remain open have halved their

staff and expenses. Every time the cases begin to rise by some fraction, lockdowns are
Article on Microeconomics in Nepal 4

initiated. This has affected the lives of workers who live on their daily wages. They are being

forced to break the rules because they would die from hunger before they die from COVID.

The situation is worse and doesn’t seem like it will return to normal anytime soon. Vaccines

are said to be free but desperate people are charged money needlessly. The vaccination rate

remains very low and the economy has seen a huge downfall.

 How has the situation discussed in the article (within your country) affected your

household economics?

I used to work as a bartender in two restaurants. But due to the pandemic, I lost both my jobs.

One of the restaurants was permanently shut because it was unable to pay the expenses

incurred over a year of lockdown. Another restaurant is only allowing takeaway as suggested

by the government. I am lucky enough that my parents can afford to pay for my living. But

what about people whose family depends on their earning and now they lost their job. The

daily expenses have also increased and most people have already spent their savings. Interest

on loans is upward of 15% and is rarely an option to normal people.

 What if anything can be changed about the microeconomic situation from the

article? Please explain.

The main thing that needs to change is government policies. Even during this pandemic when

people don’t have any source of income, the government is forcing people to pay taxes.

Government should allow businesses to get a low-interest loan and given people the privilege

to pay taxes after a year. After the pandemic has slowed down a little, the government should

encourage people to start local businesses to reduce imports and increase exports.

Hydropower plants need to be developed and the development of infrastructure could help

bring in more tourists.

 Discuss why you found the article interesting.

I found the article interesting because it provides discrete data on the current status of the

Nepalese economy and how its citizen is being affected by the economic condition. The data

is mostly about macroeconomics but factors of macroeconomics like unemployment also

affect day to day life of normal people. It also shows that Nepal has been gifted a lot of

opportunities like tourism and hydropower but doesn’t utilize them.

 Explain if you agree with the author or do not agree with the article.

I would like to say that I agree with the author and his point of view.

Therefore, the bottom line is that everyone should work together to overcome this crisis and

the different microeconomics problems that we are facing. If the opportunities are utilized

properly then working together can help set gear to economic growth in Nepal.

Word count: 1045

References

Greenlaw, S. A. & Shapiro, D. (2018). Principles of microeconomics, 2e. Open Stax Rice

University. https://d3bxy9euw4e147.cloudfront.net/oscms-

prodcms/media/documents/Microeconomics2e-OP.pdf

Moody Analytics (2021) Nepal-Economic Indicators

https://www.economy.com/nepal/indicators#ECONOMY