Nepal's elusive quest for export success meets LDC graduation - Paras Kharel for SAWTEE

Nepal is hurtling towards graduation from the least developed country (LDC) category with a low per capita income and meagre exports. This paper analyses the implications of graduation for Nepal's exports, and suggests measures that Nepal government should take to mitigate the adverse effects. It argues that export success has eluded Nepal despite trade preferences, and graduation could make it even more elusive. The fact that the prospect of tapping the country's export potential is partly predicated on preferential tariffs implies much higher export losses than projected by standard modelling exercises. Not factoring in changes in rules of origin in preference-granting countries adds to the downward bias of existing estimates. All this underlines the urgency of building productive capacity, alleviating supply-side constraints, and strengthening factors of non-price competitiveness.