Notes on Economy of Nepal and National Integration | Grade 12 > Sociology > People and Economy of Nepal | KULLABS.COM

Economy of Nepal and National Integration

Notes, Exercises, Videos, Tests and Things to Remember on Economy of Nepal and National Integration

Please scroll down to get to the study materials.

Registration open for Special Scholarships

  • Note
  • Things to remember

Economy of Nepal

Nepal is a small landlocked country situated between two emerging economic powers in Asia that are China and India. Nepal is least developed and economically vulnerable nation. Economic structure is an organized management system of different means, resources, and physical commodities or goods and services of any nation. The distribution and consumption of the goods and services are the major aspects of economy. There is an intimate relationship between society and economy. The socio-cultural structure of a society is highly affected by economic structure. Economic activities used to prevail in any society either primitive or modern.

Nepal is one of the least industrialized and underdeveloped country having an unequal distribution of income. It is so due to poverty, illiteracy, traditional agricultural practice, low investment, low productivity, less industries and deficit trade. Here, 50 percent people are under poverty line. Nepalese economy is dependent upon foreign aid, loan and remittance. Foreign aid is the significant factor of the annual budget of the nation. In the present age of economic globalization and liberalization, Nepalese economy is a little part of regional and international economy in comparison to the world market.

Fundamental aspect of Nepalese Economy

  • Agriculture

Agriculture is one of the most important base of Nepalese economy contributing 34 percent to total GDP. More than 60 percent of Nepalese are engaged in agriculture but the agriculture is done for subsistence purpose only. The industrial farming has not started well in Nepal though the system exist in some part. People engaged in it are disguised employed and it can’t afford them for the necessary food production and supply for the year.

  • Natural resources

Nepal is rich in natural resources but they are not utilized properly for the development of economy and infrastructure. We have beautiful natural landscape, various mines, high hydropower potentiality, rich tourist destination and high amount of medicinal herbs and so on. Many people are living their life by using them yet.

  • Remittance

Many people of Nepal are engaged in foreign employment. They send money to Nepal and we get remittance. But they are not utilized properly. Instead of investing in productive sectors they invest it in the sectors of housing and land.

  • Tourism

Tourism industry can flourish very well in Nepal and is flourishing as well. There are many natural beauties and big mountains. Nepal has a great mosaic of culture and we have many cultural and traditional heritages. To observe these heritages beautiful and diversified landscape, nature and natural resources, thousands of tourist used to visit here every year. Thus, tourism is very important economic activity in Nepal.

  • Foreign aid and loan

Nepalese economy is highly dependent on foreign aid and loan. Each year more than half of the budget comes from foreign aid and loan. Foreign aid and loan play a significant role in the annual budget of Nepal. We conduct various development works and training for employment programs by using foreign aid and loan.

  • Human resources

Nepal is rich in human resources, almost 54 percent people of Nepal are active but our human resources are not well qualified and trained. Most of them are labors and don’t get a job here. They are attracted towards foreign employment. Even educated people are also not getting job opportunity.

Features of Nepalese Economy

  • Subsistence agriculture system
  • Mixed economy
  • Disguised unemployment
  • Unequal distribution of researchers and means
  • Weak social and human development index
  • Increasing foreign debt
  • Lack of proper utilization of natural resources
  • Existed poverty
  • Effects of economic globalization and foreign trade
  • Economic structure is inclined towards liberalization and privatization
  • Replacement of indigenous knowledge, skills, industries and influenced by foreign imported products

Existing Subsistence Economy

Many people are getting their livelihood through agriculture and livestock that is animal husbandry. They rear buffaloes, cows, goats, chickens, bees and so on. It is taking commercial form nowadays but livestock is suffering various kinds of diseases. So farmers are having trouble day by day. Employment is also necessary for subsistence economy in Nepal. People are self-employed as well as engaged in service. The people engaged in agriculture are self-employed whereas others are engaged in industries, government offices and so on.

Commercial Economy

When we compare Nepal with 21st century, development of trade, industries, science and technologies, we find ourselves far behind. We are not able to make progress on trade and business. The major cause behind it is the unstable political system. It is also because of long-term vision and proper planning of political leader for national development. Commercial development does not take place overnight. Certain infrastructure, policy, and determination are necessary for it. Some of them are mentioned below:

  • Infrastructural development
  • Adequate investment
  • Policy
  • Market analysis
  • Protection of indigenous knowledge and skill
  • Importance of human resource
  • Political stability
  • Industrial and commercial economy

Industrial development is the major base of national development as a whole. More employment opportunity, expert, utilization of resources etc are possible only through industries. But the industrial development in Nepal is not satisfactory. Lack of quality product, high production cost, lack of due attention to traditional products, etc are some of the genuine causes behind industrial backwardness.

Integration of Nepal

National Integration

The word 'Nation' emerged out the Latin word ‘natio’ which means birth. It refers to the group of people having common origin and characteristics. According to Stalin, the nation is a historical construction of people with strong community ,and the bases of its evolution are the common language, common geography, common economic life, culture, and psychology. Nationhood is an integrated form of dedication, love, devotion and psychological unity of people living in a certain geography. It assimilates the integration, development, unity, identity and dynamism of nation.

Cultural Integration

Cultural integration refers to the coordination, belief and exchange of cultural values and identities with the sense of coexistence. The cultural unity, freedom and cultural pluralism within the society and community can support cultural integration. The cultural integration is very important because national integration is possible only through cultural integration.

Normative Integration

When we can understand the values of other communities, their religion, socio-cultural values, and practices, normative integration is possible in society. On another hand, no one is ready to lose their philosophies and cultural norms and values. It is not possible. In this situation, this cultures, norms, and values become the basis of cultural integration. Individuals’ perspective, thinking, and behaviors are also guided by such norms and values.

Social Integration

The day to day social activities, behaviors and relation helps to grow intimacy among the people and grows social integration. Such integration depends on the person's interaction and their relationship. When an individual helps and respect others social and cultural values and accepts their existence, social interaction becomes stronger.


Kharel, Durga, Elementary Sociology and Anthropology-XII

Sharma, Kamal Raj, Introduction to Sociology and anthropology in Nepal-XII, Sunrise Prakasan Pvt., Ltd., Kathmandu

Pokharel, Ishwor, Sociology-XII, Ekta Books and Distributors, Kathmandu

  1.  Nepal is one of the least industrialized and underdeveloped country having an unequal distribution of income.
  2.  Agriculture and livestock are done for subsistence economy in Nepal.
  3.  The lack of long-term vision and proper planning for national development is a cause of lack of commercial economy.
  4.  Industrial development can only provide employment opportunities.
  5.  Nationhood is a sense of unity among the people on the basis of history, language, race and ethnicity, religion etc in a certain geography. 

Questions and Answers

Click on the questions below to reveal the answers


ASK ANY QUESTION ON Economy of Nepal and National Integration

No discussion on this note yet. Be first to comment on this note