Globalization and Nepalese economy

Globalization is the process of integrating various economies of the world without creating any

hindrance in the free flow of goods and services, technology, capital and even labor or human capital. In

the simple words, the term globalization refers to extending of economic activities across the national

boundaries. It is a flow of the processes of economic transaction and their management across political

boundaries.

Globalization is defined as process of growing interdependence between all people of this planet.

People are linked together economically and social by trade, investment and governance. This is

reflected in independence in regard to trading in goods and services and in movement of capital. As a

result domestic economic development is not determined entirely by domestic policies and market

conditions.

Thus, Globalization is a process by which markets and production in different countries increasingly

interdependence due to the dynamics of trade in goods and services and flows of capital and

technology.

Features

·         Integrating national economies with global economies.

·         Free flow of trade and removal of tariff and trade barriers. Opening up national economies to foreign capital, foreign direct investment and foreign

·         technologies.

·         Fast movement of capital, information and people around globe by information technology

·         revolution.

·         Liberalizing economies through privatization process – less economic control state over

·         ownership of means of production and distribution.

·         Global governance through agencies such as international and regional organization, UN,

IMF, World Bank, WTO.

Positive Impacts

·         Foreign direct investment has being playing an important role in the global economy. In

order to become competitive, other companies have started investing overseas operations.

·         Workers move from one country to another in order to get better wages. So, in many

business, cheap labor force can be taped from everywhere in the world.

·         Direct foreign investment brings technical innovations and better management on the other

hand, world wide web brings the knowledge, resource available for everybody at low cost.

·         The growth of world trade, FDI, and important has led to more foreign competition in the

domestic market.

·         The major impact of globalization is that the global economy is becoming more integrated

day by day.

·         Opportunities have been increasing for the firms.

·         Innovations have started spreading faster.

·         In order to compete with the foreign players domestic firms are required to enhance the

              production and distribution capabilities.

·         Economic realization of a global common market based on the freedom of exchange of

goods and capital.

Negative impact

·         Diminishing role of state

·         Harmful to developing countries

·         Means of neo-colonialism

·         Impact on regional/ clash on civilization

·         Causes economic inequality and exploitation

·         Increased dependency on MNCs

·         Elements of uncertainty. FDI can be repatriated at any time.

·         Interference of inter nation institutions in national policies.

·         Depletions of natural resources.

·         The interest of poor countries and poor nations are being neglected.

Globalization and Nepalese economyNepalese economies experiences positive as well as adverse effects after opening up her economy

in the era of globalization.The positive impacts are seen in service sectors/ labor market and growth

is not in negative path. But trade shows import domination, negative effects on manufacturing

sectors especially garment industry is observed.

Financial sector shows positive effects after rapid globalization. A large no. of commercial banks,

financial institution and their competition make efficient market.

Foreign exchanges earning through remittance is major source of GNP.

Due to rapid globalization and trade liberalization the Nepalese manufacturing sectors faces

following challenges

·         Increasingly stiff competition in the export market decreased.

·         Increasing in flows of imported consumer goods due to rapid liberalization

·         Additional pressure on balance of payment due to inflows of imported manufactures.

Nepalese economy lacks self-sufficiency in agricultural products too. It has to import huge amounts

• of primary products, grains, vegetable, fruits and meat from international market.

Other impacts can be seen in technology transfer, information and communication, education.