Trade Liberalization in Nepal: Has Liberalization Increased Welfare?

Abstract

Nepal drastically liberalized trade in the late 1980s and early 1990s, and it currently has the lowest tariff rates in South Asia. Nepal is also a member of multiple regional trade and bilateral trade agreements and it joined SAFTA in 2008. An analysis of Nepal's economic growth, income inequality, and poverty, along with the problems of SAFTA reveal that liberalized trade has only brought modest gains to Nepal. These gains have slightly benefited Nepal's urban sector and the richest segment of the society, and have failed to be distributed across the population.