Nepal’S Enduring Poverty

Non-Economic Barriers to Economic Growth

Theory of economic growth has made remarkable progress over the past three decades that has helped give us a better understanding of factors that induce or inhibit growth. In practice, though, a majority of countries have failed to increase growth and improve living conditions. The elixir that has been absent from traditional growth theories is the role of an enabling environment that is needed to induce and support growth. This book--a case study of Nepals poverty--presents the view that non-economic factors play an outsized role in determining the productive use of economic resources which is critical to spur growth, to a much greater extent that the level of resources a country commands. The theme developed in this book is that a countrys institutional weaknesses create a hostile environment for economic growth to occur and be sustained. Institutional handicaps exercise powerful constraints on the efficiency of use of resources and creation of wealth. This happens because institutions are rooted in a countrys history, its culture, emotions, and even in national psychology.