Role of politics and governance in socioeconomic development
Role of Politics and Governance
in Socioeconomic Development
SUGAT RATNA KANSAKAR
THE UNIQUE NEPAL
• Nepal is among very few countries in the world, never
• Nepal has legendary Gurkha soldiers, many consider
bravest in the world
• History of mankind has only 4 mass-based religions-
Hinduism, Christianism, Islamism & Buddhism. Among 200
countries of the world, Nepal is one, where one of theose
religions originated. Buddha was born in Nepal.
• Nepal has one of the biggest hydro-power potentials in
the world. Nepal has 6000 rivers.
THE UNIQUE NEPAL….
• Nepal has tremendous tourism potential with
Switzerland-like scenic beauties and heritage sites,
traditional cultures and above all high potential for
religious tourism (Hinduism and Buddhism).
• Excellent climate, fertile land, hard-working rural
population and above all increasing numbers of
skilled “knowledge workers” and educated youths are
other factors, for which we should be proud of.
• Nepalese society has “willing to change” culture, a
WHERE WE STAND
• Pattern of growth in Per Capita Income of few countries in US$ are as
Nepal India China Afghan Indone
2011 607 1528 5439 586 3495 8533 1182 695
2005 303 735 1777 240 1258 5468 688 495
2000 235 444 957 155 773 3204 493 603
1990 198 374 360 278 679 2688 429 1121
1980 139 264 318 257 526 854 357 981
1970 87 111 114 146 82 96 205 388
• Looking back at Nepal's socio-economic development
scene in the past six decades, it will be a futile exercise to
try to prove that we have had "good" governance.
• It is altogether a different matter that few politicians, who
were responsible in the governance in the past, used to
defend their "rule" by trying to prove that country
developed satisfactorily using yardsticks totally different
from universally accepted norms.
• Presently, it is crystal clear that Nepal even lagged behind
countries like Ethiopia, Vietnam, Cambodia, Laos, Bhutan
and many other countries in Africa and Central America.
WHO RULED THE COUNTRY?
• Million dollar question is what went wrong and who were
responsible for this state of affairs. Those responsible for running
our country could be broadly classified in two groups- rulers (kings
& politicians) and bureaucrats.
• Obviously, rulers will be at the helm of affairs, so they are mainly
responsible for governance. Next to politicians, second biggest
responsibility lies with bureaucrats.
• Although private sector, that is trade and industry, and social
organizations like NGOs and INGOs play substantial role in socio-
economic progress of the society, they have minimum role in
governance of the country.
• Quite often people, in general, are also blamed by few
intellectuals, politicians and journalists for nation’s problems. This
is absolutely rubbish judgement.
• Few historical turning points, critical junctures, of
Nepal & world are:
– Revolution in England in 1688AD, Prithvi Narayan Shah
did unification of Nepal in 1743AD
– Steam-powered ships & railways started from 1712AD,
and industrial age started from 1750AD
– French revolution in 1789AD & USA civil war in 1860, Jung
Bahadur became Prime Minister in 1846AD until 1877
– Advanced industrial age kicked off from 1870 onwards
with invention of electricity, telephone, steel ,chemicals,
electronics, pharmaceuticals, automobiles, airplanes etc
– Rana rule ousted in 1950AD (Information Age started
from 1946AD, when 1st computer ENIAC was made)
– Absolute monarchy started from 1960AD, Singapore
became an independent state with Lee Kuan Yew as
President in 1965 & China got leadership of Deng
Xiaoping in 1977
– India also could not take off after independence until
– Democracy with constitutional monarchy restored in
1990AD, but Narasimha Rao, Man Mohan Singh, &
Chidambaran team changed Indian economy from 1992
WORLD & NEPAL
• When western world was making great inventions and
moving forward with massive industrialization during
second half of 19th century and first half of 20th century,
Rana rule was busy with internal squabbles and tackling
British ruler in India, or just enjoying money and power
• Similarly, after ousting of authoritarian Rana regime also,
we missed “good governance” and progress in science and
• In the past 63 yrs, kings, political leaders and bureaucrats
did not or could not grapple with real institutional causes
of slow growth before 2007BS itself. So, they did mistake
exactly as India did after independence.
HOW BAD IS THE SITUATION NOW
• The man-on-the-street, especially younger generation, knowingly or
unknowingly, has already become “world-citizen” in the “flat-world-
platform” and is increasingly aware of the outside world due to dozens
of TV channels made possible by satellite technology, with
unprecedented digital connectivity regardless of distance and unlimited
access to contents through Internet & in addition fueled by shock of
Darchula to Dubai and Malangwa to Malaysia syndrome.
• The man-on-the-street is asking emotionally with total frustration: what
then is the solution? Who is going to take leadership to save the country
from falling in the ditch of “failed state”?
CIRCUMSTANCE vs. PERSONALITY
• From ancient time, one intellectual debate is going on :
whether circumstance or personality shape a society or
country. In case of Singapore, it is being said that fast
growth is due to both circumstance and extraordinary
personality of Lee Kuan Yew.
• Lee sought advice from Japan, who advised him to make
Singapore “a center for knowledge & information”. Lee,
then, instructed to give emphasis on science, mathematics
& computer in all schools.
• A prominent US businessman: “You talk to the leadership
in China, and they are all engineers, and they get what is
going on immediately. The Americans don’t, because they
are all lawyers.”
CIRCUMSTANCE vs. PERSONALITY..
• In 1961, Deng, in a conference in Guangzhou, said “No
matter whether the cat is black or white, if it catches
mice, it’s a good cat”. In fact, that time he was trying to
convince Mao that it did not matter whether the policies
appeared communist or not, China needed policies that
would encourage production so that it could feed its
• After Deng came to power in 1977, grain output increased
by 33% within 6yrs (1984).
• India had both democracy and political stability, but
growth and prosperity did not happen until 1992. In 2009,
LKY commented “Gandji’s idea was to give them back
village, the spinning wheel. Well, I mean, that’s going to
get you nowhere in this industrial age”.
CIRCUMSTANCE vs. PERSONALITY..
• Rana rule from 1846 to 1950, it was golden chance for
them to develop country, as British was taking leadership
in science, technology and industrialization in the same
• King Mahendra and Birendra also got opportunity to do
something for the country in 30 yrs of their absolute
• After democracy in 1990, NC & UML had ample time to
make things happen as India did in the same period
• 6 years of LOKTANTRA, growth almost stagnant
• In addition to reform, “Some luck is key, because history
always unfolds in a contingent (uncertain/accidental)
• Many say that main reason for Nepal’s slow growth is
India factor. But Nepal is not the only country in the
world with a big brother neighbor.
• In 1979, Deng Xiaoping visited USA, ignoring Taiwan
issue for national benefit. Nepal is talking nonstop for
past 63 yrs about big brother India, 1950 treaty,
Koshi, Mahakali etc.
• Land-locked country. But look at Botswana. In 1895, 3
tribal chiefs showed their courage & leadership
capability by going all the way to London to meet PM.
• Rana rule and Panchayat system. What about slow
growth even in democracy and Loktantra?
• Political instability. Does democracy and political
stability go together? How come garment
industry flourished in politically unstable
• It is due to our culture! What about pace of
development of India before and after 1992?
• Ignorant and unintelligent politicians! How can
all PMs & 26 ministers in the past 63 years be
ignorant and unintelligent?
• Predominant communist parties. What about
growth in China compared to India?
RECIPE FOR PROSPERITY
• According to MIT Professor/economist Daron &
Harvard political scientist Robinson, there is strong
synergy between economic & political institutions.
Both institutions should encourage economic growth.
• They write that the result of faulty institutions is
“economic stagnation and – as the recent history of
Angola, Cameroon, Chad, the Democratic republic of
Congo, Haiti, Liberia, Nepal, Sierra Leone, Sudan and
Zimbabwe illustrates- civil wars, mass displacements,
famines, and epidemics, making many of these
countries poorer today than they were in the 1960s.”
RECIPE FOR PROSPERITY…
• Key is to “bring in” broad cross-section of society
within political as well as economic activities
• Political power must be vested broadly across the
society, to establish strong and effective economic
institutions that enforce property rights, create a level
playing field & encourage investments in new areas to
• Economic growth and technological change are
accompanied by “creative destruction” in the words
of great economist Joseph Schumpeter, replacing old
RECIPE FOR PROSPERITY…
• New sectors attract resources away from old
ones. New firms take business away from
• New technologies make existing skills &
• New laws, rules, procedures replace traditional
• Creative destruction creates “losers as well as
winners in the political arena and in the
economic market place”. Hence, bulldozing is a
must to make forward-looking new institutions.
RECIPE FOR PROSPERITY…
• In a World Bank study of “Doing Business”, they
found that for a country to develop, the
government must make easy to
– Start a business in terms of rules, regulation, license
– Hire and fire workers
– Enforce a contract
– Get credit
– Close a business that goes bankrupt or is failing
• Do we need new constitution to make “doing
The New Begining
• Let us try to make a difference in the governance of the
• Let us put pressure on politicians and top bureaucrats to
go for “creative destruction” to take country to a new
height to move faster towards New Nepal.
• Let us try to bring positive environment & energize others,
to enable country to move forward through resistance &
chaos and above all to have heartfelt, deep and authentic
excitement about whatever work, we are doing