Abstract
The paper views urbanization as a driver of economic growth as well as poverty alleviation in Nepal. It will analyze the urbanization trend in Nepal focusing on the following three issues in particular:
1. Competitiveness of cities,
2. Inclusive service, and
3. Fiscal sustainability of municipalities.
Nepal has natural resource advantage; but this is not fully used due to lack of market coordination and low productivity. The pace of urbanization is highest in Nepal among the countries of South Asia. It has led to economic growth. There is a high correlation between the two. The contribution of the urban sector to GDP is increasing fast. However, there is a lack of a holistic approach to positioning cities as engines of economic growth, business incubation and skills enhancement. The only way to raise and sustain economic growth of Nepal is to enhance the competitiveness of her cities by using their comparative advantages. She has not been able to make use of such advantages due to lack of infrastructure and institutional constraints. Cities are suffering from acute shortage of infrastructure and services. They compete in attracting investments. Urban infrastructure is not adequate to sustain the growth impulses, which has led to the erosion of competitiveness of cities. The paper will make a rigorous economic analysis on the competitiveness of cities. Based on the analysis, it will explain what has limited their competitiveness and what has hindered the economic transition of the country.
Urbanization in Nepal has helped to reduce poverty. However, one of its challenges is growing exclusion. There is a lack of inclusiveness in service delivery as evidenced by poor services and slum areas. It has become difficult to sustain the inclusive nature of traditional towns. There is an increasing exclusion of the poor from service delivery. There are problems related to fiscal sustainability. Failure to mobilize the private sector has slowed down economic growth. The purpose of the paper is to address such issues and challenges of managing urbanization in Nepal. It aims to explore ways and means of transforming Nepal’s economy through increased investments in the lead activities of urban regions that have comparative advantages.
The paper will begin with an analysis of the trend of urbanization in Nepal and explain its economic causes and impacts. Due to constraints in connectivity and power shortage, it has become difficult to use the linkage opportunities and growth impulses. This has led to import-intensive activities at the cost of basic industries. As a result, the economy has become less resilient and less competitive. The paper will explore how infrastructure can be better planned to sustain growth impulses in order to make cities economically more competitive. It will deal with how to make cities more competitive in attracting investments. The role of the cities as the engines of economic growth with the use of their comparative advantages has been threatened by the growing deficits in infrastructure. Recognizing this, the paper will deal with how to manage infrastructure to enable cities to attract investments.
Every part of the nation is urbanizing in its own way. In the process, opportunities are created; but they are not shared equally. The access of the poor to services has decreased over the years. The paper will explore the effect of urbanization on the increasing trend of exclusion in service delivery. It will discuss the impacts of global economy and exposure to outside culture on the livability of cities. It will assess the extent of exclusion of slum areas and the poor in the urbanization process. It will explore ways and means of halting the trend of increasing disparity with regional imbalances and formation of slums and squatters. It will explore the economic causes of increasing exclusion. It will assess how the participation of the people in service delivery will reduce this. It will address the issues of slums and their challenges.
Based on the analysis of the comparative advantages of cities, the paper will explore the causes of failure in utilizing these for development. In order to use the opportunities created by urbanization, it is necessary to invest in lead activities with high forward and backward linkages. It will be based on an analysis of the multiplier effects of lead activities of different cities. It will work on how to make a breakthrough in creating more resilient and more self-reliant urban economies. This will be directed towards making economic transformation through the creation of export base. Finally, the paper will deal with the required changes in institution related to governance and financing. Future costs of urbanization are likely to increase at a rapid rate because of depletion of resources. The paper will explore ways and means of providing infrastructure in a more productive, affordable and inclusive manner. It will assess the fiscal deficit of municipalities. It will suggest strategies for improving their fiscal sustainability.
Research Methodology: For the preparation of the paper, rigorous research will be carried out. It will be primarily based on secondary data and information. Available data will be analyzed to show the trend of urbanization in Nepal. Preliminary findings of the research will be discussed with the concerned stakeholders. Consultative processes will be followed to finalize the outputs of the research.
Urbanization is easily understood and accepted as an inevitable process. However, where the population will be located in the future is not easy to predict. This will depend on economic opportunities that are created through investments in infrastructure and industry as well as policies on trade and transit. Investments in areas with greater growth potential and higher multiplier effects will yield greater return in the long run. Efforts will thus be made to link these together. This will make urban development more effective and inclusive.
Forward and backward linkages of some of the lead activities will be assessed with a view to build up of the competitiveness of potential sectors. The research will aim to identify economic activities with comparative advantages to trigger economic growth and create jobs for both urban and rural poor. It will help to prioritize investments in infrastructure that are needed to support the potential growth sectors. Efforts will be made to prepare a framework for prioritizing activities on the basis of potential for growth impulses and multiplier effects. Besides, it will address the following issues:
• How can cities help the integration of the economy of Nepal in the wake of growing competitiveness?
• How should the sustainable use of domestic resources and the impacts of globalization be considered in the process?
As a case study, an urban region will be selected and analyzed considering several issues including the following:
• Poverty and population dynamics;
• Unleashing economic growth in relation to resource base and potentials;
• Rural-urban linkage potentials;
• Locational analysis and identification of lead activities;
• Investments in infrastructure; and
• Alternate forms of entitlement (e.g., vocational training, urban skills etc.) in growth centers.
The research will be directed to explore the possibility of enhancing its economic base and resilience. It will use quantitative and/or objective methodology to identify investment areas for maximizing impacts with minimum resource and to find out an inclusive development strategy to boost up both urban and rural growth. Existing linkages will be measured in terms of growth, equity and sustainability. Efforts will also be made to link these with enhancing linkages with the outside economy. The different factors that determine the competitiveness of cities will be identified. This will be related with the needs of the global economy and tied up with the integration of Nepal’s economy with the same.
The research will relate service delivery with affordable standards and access as well as pricing policies. It will be directed towards increasing competitiveness in the supply of infrastructure and services and ensuring equitable pricing and fiscal policies. It will deal with issues of cost sharing through a rigorous study of innovative approaches like land pooling. For an analysis of fiscal sustainability, how investments are planned and made will be studied. Ways of monitoring the costs of urbanization will be devisd in order to recover the costs. Various tools of impact analysis with a focus on the role of participatory planning will be used to increase affordability and reduce exclusion. It will devise tools to identify feasible projects and ways of financing them.