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Saturday, May 18, 2024
HomeAcademicNepal's Economic Diplomacy: Leveraging Trade, Investment, Tourism, and Overseas Employment

Nepal’s Economic Diplomacy: Leveraging Trade, Investment, Tourism, and Overseas Employment

Hi everyone, welcome to DataSagar. Today, I would like to cover some crucial yet important facts and figures that every Nepali should be well aware of. In the meantime, some of you might be wondering what foreign diplomacy actually is.

When a nation uses diplomacy to advance its economic interests abroad and achieve its economic objectives, this practice can be referred to as economic diplomacy. It entails the use of diplomatic channels to negotiate economic deals, attract foreign investment, market travel/tourism, and strengthen international collaboration in such like infrastructure development and human resource management. Economic diplomacy, to put it simply, is a strategy used by nations to boost their economies and enhance the welfare of their populations.

As Nepal is well-known for both its burgeoning economy and its magnificent natural beauty. Nepal is a key actor in South Asia with a GDP of USD 33.6 billion and a GDP per capita of USD 1,191. Nepal has been actively participating in economic diplomacy, which is essential for fostering the country’s economic development. In light of international trade, foreign direct investment, tourism, government development assistance, and abroad employment, this article ought to examine Nepal’s economic diplomacy with a data-driven approach. Lets us begin with an idea of what our diplomacy is like from an economic perspective based on data, facts, and figures.

Foreign Trade:

Over the years, Nepal’s foreign trade has steadily increased. Nepal’s exports totaled NPR 1,41,124 million in 2020, compared to imports of NPR 15,39,837 million. About two-thirds of all trade between Nepal and its commercial partners are with India. The United States, Germany, the United Kingdom, and Turkey are among Nepal’s other main export markets. However, India, China, Argentina, the United Arab Emirates, and the United States are Nepal’s main import suppliers. To lessen its reliance on India, Nepal has been attempting to diversify its trading relationships. The nation has been looking into ways to expand its trade with Bangladesh, China, and other nations.

Foreign Direct Investment (FDI)

For Nepal’s economy to thrive, foreign direct investment (FDI) is a crucial source of funding. FDI worth 32 billion NPR was directed to Nepal in 2020. The top foreign investors in Nepal are from China, India, the United States, South Korea, and the British Virgin Islands. The government of Nepal has been providing numerous incentives to draw FDI, including tax breaks, profit repatriation, and streamlined investment procedures. To draw FDI, Nepal is boosting industries including hydropower, tourism, agriculture, and manufacturing.


One of the main drivers of Nepal’s economy is tourism. The nation is renowned for its stunning mountains, hiking routes, and culturally significant locations. Around 232,000 visitors visited Nepal in 2020, a sharp decline from the 1.2 million tourists Nepal had in 2019 before to the pandemic. Russia, China, the United States, the United Kingdom, and India are Nepal’s top tourist-producing nations. Through a number of steps, including granting visa-free travel to some nations, creating new trekking routes, and enhancing infrastructure, Nepal has been encouraging tourism.

Official Development Assistance(ODA)

For Nepal’s development programs, official development aid (ODA) is a significant source of funding. Nepal received USD 1,870,003,870 in ODA in the year 2020. The United States, the United Kingdom, China, India, and Japan are the main bilateral development partners, while the World Bank, the Asian Development Bank, the European Union, the United Nations, and GAVI are the leading multilateral development partners. In order to obtain funding for its development projects, the Nepalese government has been actively interacting with these development partners.

Foreign Employment

Many Nepalese laborers rely heavily on their income from outside employment. 166,698 Nepalese employees acquired new work visas or extensions to work abroad in 2020. Only two nations, Qatar and Saudi Arabia, which are countries where labor is sought after, have bilateral agreements with Nepal. However, Nepalese laborers are also employed in nations like the UAE, Bahrain, and Oman. The government of Nepal has been attempting to enhance the welfare and working circumstances of Nepalese workers abroad.

With all these, Nepal’s economic diplomacy has centered on maximizing its advantages in commerce, investment, tourism, official development assistance, and international employment. Nepal has been looking for ways to increase foreign direct investment (FDI), diversify its trade partners, promote tourism, secure more ODA, and enhance working conditions for Nepalese employees abroad. Nepal has the opportunity to profit from the economic rise of both China and India, thanks to our strategic placement between the two major economic giants. To fully achieve our economic potential, we must overcome a number of issues, including weak infrastructure, unstable politics, and a challenging business environment.

At the same time, we can’t deny the fact that the disastrous NepalQuake 2015 and COVID-19 pandemic has had a significant negative impact on Nepal’s economy, particularly the travel and remittance industries. The Nepalese government has been putting different steps in reconstruction as well as in place to lessen the pandemic’s negative economic effects, including aiding the impacted enterprises, promoting domestic travel, and increasing infrastructure spending. For Nepal to fully recover from all these and continue to prosper, our economic diplomacy will be of paramount importance.

Nepal’s economic diplomacy has been concentrated on utilizing its advantages and strengths to support economic development and prosperity. The government of Nepal has been aggressively collaborating with its allies to obtain funding to advance commerce, investment, tourism, and international employment. Although Nepal has a number of obstacles, its advantageous position, stunning scenery, and developing economy provide it with many chances for economic expansion and advancement.

The author of this blog post is a technology fellow, an IT entrepreneur, and Educator in Kathmandu Nepal. With his keen interest in Data Science and Business Intelligence, he writes on random topics occasionally in the DataSagar blog.
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