Economic Growth in Nepal: Macroeconomic Determinants, Trends and Cross-Country Evidences

Luna Ghimire; Ajay Kumar Shah; Ram Kumar Phuyal

doi:doi:10.11648/j.jwer.20200901.20

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Economic Growth in Nepal: Macroeconomic Determinants, Trends and Cross-Country Evidences

Luna Ghimire, Ajay Kumar Shah, Ram Kumar Phuyal

Published in Journal of World Economic Research (Volume 9, Issue 1)

Received: 24 February 2020 Accepted: 20 April 2020 Published: 19 May 2020

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Abstract

Using time series data of the last twenty-seven years (1990 to 2016), this study tries to go in-depth regarding the relationship between macroeconomic variables and its impact on economic growth of Nepal. Further, this study also compares the economic growth of Nepal with six Asian countries such as Bangladesh, Bhutan, China, India, Pakistan and Sri Lanka. The study is based on secondary data which are extracted from a legitimate source of World Bank. The dependent variable of this study is Gross Domestic Product (GDP) growth (annual%). To observe the GDP growth, some independent variables like exchange rate, export of goods and services, Foreign Direct Investment (FDI) net flow, Gross Fixed Capital Formation (GFCF), import of goods and services and inflation are chosen. Based on the variables, statistical tools such as multiple linear regression, Karl Pearson's correlation, and trend analysis are run. As per the result, exchange rate, GFCF, and import have a significant impact on the economic growth of Nepal while export, FDI, and inflation do not have a significant impact. Further, the cross-country evidence shows that Bangladesh and India have a significant positive GDP growth trend, while Bhutan and Sri Lanka have a positive GDP growth trend but do not have a significant growth. Also, China, Nepal, and Pakistan do not have a significant growth and their growth trend is negative. Based on the results and analysis it is suggested that a strong exchange rate leads low cost of production with cheap imports and also helps to control inflation due to low prices of foreign goods and services. In this context, the policymaker should initiate to make tight policies against the reduction of inflation in the country.

Published in	Journal of World Economic Research (Volume 9, Issue 1)
DOI	10.11648/j.jwer.20200901.20
Page(s)	66-72
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2020. Published by Science Publishing Group

Keywords

Economic Growth, GDP, Exchange Rate, Export, FDI, GFCF, Import, and Inflation

References

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APA Style

Luna Ghimire, Ajay Kumar Shah, Ram Kumar Phuyal. (2020). Economic Growth in Nepal: Macroeconomic Determinants, Trends and Cross-Country Evidences. Journal of World Economic Research, 9(1), 66-72. https://doi.org/10.11648/j.jwer.20200901.20

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ACS Style

Luna Ghimire; Ajay Kumar Shah; Ram Kumar Phuyal. Economic Growth in Nepal: Macroeconomic Determinants, Trends and Cross-Country Evidences. J. World Econ. Res. 2020, 9(1), 66-72. doi: 10.11648/j.jwer.20200901.20

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AMA Style

Luna Ghimire, Ajay Kumar Shah, Ram Kumar Phuyal. Economic Growth in Nepal: Macroeconomic Determinants, Trends and Cross-Country Evidences. J World Econ Res. 2020;9(1):66-72. doi: 10.11648/j.jwer.20200901.20

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@article{10.11648/j.jwer.20200901.20,
  author = {Luna Ghimire and Ajay Kumar Shah and Ram Kumar Phuyal},
  title = {Economic Growth in Nepal: Macroeconomic Determinants, Trends and Cross-Country Evidences},
  journal = {Journal of World Economic Research},
  volume = {9},
  number = {1},
  pages = {66-72},
  doi = {10.11648/j.jwer.20200901.20},
  url = {https://doi.org/10.11648/j.jwer.20200901.20},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jwer.20200901.20},
  abstract = {Using time series data of the last twenty-seven years (1990 to 2016), this study tries to go in-depth regarding the relationship between macroeconomic variables and its impact on economic growth of Nepal. Further, this study also compares the economic growth of Nepal with six Asian countries such as Bangladesh, Bhutan, China, India, Pakistan and Sri Lanka. The study is based on secondary data which are extracted from a legitimate source of World Bank. The dependent variable of this study is Gross Domestic Product (GDP) growth (annual%). To observe the GDP growth, some independent variables like exchange rate, export of goods and services, Foreign Direct Investment (FDI) net flow, Gross Fixed Capital Formation (GFCF), import of goods and services and inflation are chosen. Based on the variables, statistical tools such as multiple linear regression, Karl Pearson's correlation, and trend analysis are run. As per the result, exchange rate, GFCF, and import have a significant impact on the economic growth of Nepal while export, FDI, and inflation do not have a significant impact. Further, the cross-country evidence shows that Bangladesh and India have a significant positive GDP growth trend, while Bhutan and Sri Lanka have a positive GDP growth trend but do not have a significant growth. Also, China, Nepal, and Pakistan do not have a significant growth and their growth trend is negative. Based on the results and analysis it is suggested that a strong exchange rate leads low cost of production with cheap imports and also helps to control inflation due to low prices of foreign goods and services. In this context, the policymaker should initiate to make tight policies against the reduction of inflation in the country.},
 year = {2020}
}

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TY  - JOUR
T1  - Economic Growth in Nepal: Macroeconomic Determinants, Trends and Cross-Country Evidences
AU  - Luna Ghimire
AU  - Ajay Kumar Shah
AU  - Ram Kumar Phuyal
Y1  - 2020/05/19
PY  - 2020
N1  - https://doi.org/10.11648/j.jwer.20200901.20
DO  - 10.11648/j.jwer.20200901.20
T2  - Journal of World Economic Research
JF  - Journal of World Economic Research
JO  - Journal of World Economic Research
SP  - 66
EP  - 72
PB  - Science Publishing Group
SN  - 2328-7748
UR  - https://doi.org/10.11648/j.jwer.20200901.20
AB  - Using time series data of the last twenty-seven years (1990 to 2016), this study tries to go in-depth regarding the relationship between macroeconomic variables and its impact on economic growth of Nepal. Further, this study also compares the economic growth of Nepal with six Asian countries such as Bangladesh, Bhutan, China, India, Pakistan and Sri Lanka. The study is based on secondary data which are extracted from a legitimate source of World Bank. The dependent variable of this study is Gross Domestic Product (GDP) growth (annual%). To observe the GDP growth, some independent variables like exchange rate, export of goods and services, Foreign Direct Investment (FDI) net flow, Gross Fixed Capital Formation (GFCF), import of goods and services and inflation are chosen. Based on the variables, statistical tools such as multiple linear regression, Karl Pearson's correlation, and trend analysis are run. As per the result, exchange rate, GFCF, and import have a significant impact on the economic growth of Nepal while export, FDI, and inflation do not have a significant impact. Further, the cross-country evidence shows that Bangladesh and India have a significant positive GDP growth trend, while Bhutan and Sri Lanka have a positive GDP growth trend but do not have a significant growth. Also, China, Nepal, and Pakistan do not have a significant growth and their growth trend is negative. Based on the results and analysis it is suggested that a strong exchange rate leads low cost of production with cheap imports and also helps to control inflation due to low prices of foreign goods and services. In this context, the policymaker should initiate to make tight policies against the reduction of inflation in the country.
VL  - 9
IS  - 1
ER  -

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Author Information

Luna Ghimire

Ace Institute of Management (AIM), Pokhara University, Pokhara, Nepal
Ajay Kumar Shah

Ace Research Centre, Ace Institute of Management (AIM), Pokhara University, Pokhara, Nepal
Ram Kumar Phuyal

Centre for Economic Development and Administration (CEDA), Tribhuvan University, Kirtipur, Nepal

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APA Style

Luna Ghimire, Ajay Kumar Shah, Ram Kumar Phuyal. (2020). Economic Growth in Nepal: Macroeconomic Determinants, Trends and Cross-Country Evidences. Journal of World Economic Research, 9(1), 66-72. https://doi.org/10.11648/j.jwer.20200901.20

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ACS Style

Luna Ghimire; Ajay Kumar Shah; Ram Kumar Phuyal. Economic Growth in Nepal: Macroeconomic Determinants, Trends and Cross-Country Evidences. J. World Econ. Res. 2020, 9(1), 66-72. doi: 10.11648/j.jwer.20200901.20

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AMA Style

Luna Ghimire, Ajay Kumar Shah, Ram Kumar Phuyal. Economic Growth in Nepal: Macroeconomic Determinants, Trends and Cross-Country Evidences. J World Econ Res. 2020;9(1):66-72. doi: 10.11648/j.jwer.20200901.20

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@article{10.11648/j.jwer.20200901.20,
  author = {Luna Ghimire and Ajay Kumar Shah and Ram Kumar Phuyal},
  title = {Economic Growth in Nepal: Macroeconomic Determinants, Trends and Cross-Country Evidences},
  journal = {Journal of World Economic Research},
  volume = {9},
  number = {1},
  pages = {66-72},
  doi = {10.11648/j.jwer.20200901.20},
  url = {https://doi.org/10.11648/j.jwer.20200901.20},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jwer.20200901.20},
  abstract = {Using time series data of the last twenty-seven years (1990 to 2016), this study tries to go in-depth regarding the relationship between macroeconomic variables and its impact on economic growth of Nepal. Further, this study also compares the economic growth of Nepal with six Asian countries such as Bangladesh, Bhutan, China, India, Pakistan and Sri Lanka. The study is based on secondary data which are extracted from a legitimate source of World Bank. The dependent variable of this study is Gross Domestic Product (GDP) growth (annual%). To observe the GDP growth, some independent variables like exchange rate, export of goods and services, Foreign Direct Investment (FDI) net flow, Gross Fixed Capital Formation (GFCF), import of goods and services and inflation are chosen. Based on the variables, statistical tools such as multiple linear regression, Karl Pearson's correlation, and trend analysis are run. As per the result, exchange rate, GFCF, and import have a significant impact on the economic growth of Nepal while export, FDI, and inflation do not have a significant impact. Further, the cross-country evidence shows that Bangladesh and India have a significant positive GDP growth trend, while Bhutan and Sri Lanka have a positive GDP growth trend but do not have a significant growth. Also, China, Nepal, and Pakistan do not have a significant growth and their growth trend is negative. Based on the results and analysis it is suggested that a strong exchange rate leads low cost of production with cheap imports and also helps to control inflation due to low prices of foreign goods and services. In this context, the policymaker should initiate to make tight policies against the reduction of inflation in the country.},
 year = {2020}
}

Copy | Download

TY  - JOUR
T1  - Economic Growth in Nepal: Macroeconomic Determinants, Trends and Cross-Country Evidences
AU  - Luna Ghimire
AU  - Ajay Kumar Shah
AU  - Ram Kumar Phuyal
Y1  - 2020/05/19
PY  - 2020
N1  - https://doi.org/10.11648/j.jwer.20200901.20
DO  - 10.11648/j.jwer.20200901.20
T2  - Journal of World Economic Research
JF  - Journal of World Economic Research
JO  - Journal of World Economic Research
SP  - 66
EP  - 72
PB  - Science Publishing Group
SN  - 2328-7748
UR  - https://doi.org/10.11648/j.jwer.20200901.20
AB  - Using time series data of the last twenty-seven years (1990 to 2016), this study tries to go in-depth regarding the relationship between macroeconomic variables and its impact on economic growth of Nepal. Further, this study also compares the economic growth of Nepal with six Asian countries such as Bangladesh, Bhutan, China, India, Pakistan and Sri Lanka. The study is based on secondary data which are extracted from a legitimate source of World Bank. The dependent variable of this study is Gross Domestic Product (GDP) growth (annual%). To observe the GDP growth, some independent variables like exchange rate, export of goods and services, Foreign Direct Investment (FDI) net flow, Gross Fixed Capital Formation (GFCF), import of goods and services and inflation are chosen. Based on the variables, statistical tools such as multiple linear regression, Karl Pearson's correlation, and trend analysis are run. As per the result, exchange rate, GFCF, and import have a significant impact on the economic growth of Nepal while export, FDI, and inflation do not have a significant impact. Further, the cross-country evidence shows that Bangladesh and India have a significant positive GDP growth trend, while Bhutan and Sri Lanka have a positive GDP growth trend but do not have a significant growth. Also, China, Nepal, and Pakistan do not have a significant growth and their growth trend is negative. Based on the results and analysis it is suggested that a strong exchange rate leads low cost of production with cheap imports and also helps to control inflation due to low prices of foreign goods and services. In this context, the policymaker should initiate to make tight policies against the reduction of inflation in the country.
VL  - 9
IS  - 1
ER  -

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