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6 Problem of Nepalese Foreign Trade

6 Problems of Nepalese Foreign Trade

History of Nepalese Foreign Trade:

Foreign trade plays a very vital role in the economic development of a nation. Many countries are involved in foreign trade to create employment opportunities and increase the development of economic growth. As you know that Nepal is a landlocked country bordered by India on three sides and China on one side. Before 1951 B.S (2007 B.S), Nepal had trade relations with India and Tibet only. After the fall of the Rana Regime and the introduction of democracy in the years 2007 B.S (1951 A.D). Then Nepal started foreign trade relationships with many countries. On April 4, 2004 A.D, Nepal become a member of the World Trade Organization (WTO). Nepal is also a member of the South Asian Free Trade Agreement (SAFTA) has signed various multilateral and bilateral trade organizations. 

6 Problems of Nepalese Foreign Trade:

i. Landlockness: As you know that Nepal is a landlocked country. There is no direct access to sea transportation in Nepal. It is bordered by China on one side and India on three sides.  Goods and Services are exported by different countries through land transportation and air transportation. The main problem of Nepalese foreign trade is illegal to trade between India, and Nepal due to the open border with India. 

ii. Low export and High import: This is the major problem of Nepalese foreign trade. In Nepal, the production of exportable goods and services is very limited and the production of importable goods and services is unlimited (very high). Nepal has been exporting such woolen carpets, ready-made garments, handicrafts, herbs, shrubs, etc. Every year's export of Nepa production decreases. On another side, Import is increasing rapidly every year in Nepal.

iii. Production of low-quality goods: As you know that Nepal goods and services export was very low in the international market due to the production of low-quality goods. The use of backward technology, inferiors input, etc. is the main reason for the production of low-quality goods in Nepal. Few productions of goods that Nepal has been exporting in the international market and this is the main problem of Nepalese foreign trade.

iv. High cost of production: Every year's export was decreasing rapidly in Nepal due to the high cost of production. Some of the product was good in quality but not exported to the international market. Own citizens cannot afford to buy domestic products due to the high cost of production goods. The cause behind the high cost of production in Nepal is the use of traditional technology, inefficient labour, import raw materials, etc. This is also one main problem of Nepalese foreign trade.

v. Lack of publicity and advertisement: Some of the production of goods and services was high in quality at a low price but the product was not exported to the international market due to the lack of publicity and advertisement. Publicity and advertisement play a vital role in the promotion of goods into the international market. So, this is also the main problem of foreign trade.

vi. Slow industrial development: Industrial development was very slow in Nepal and still underdeveloped and the infant stage. There is no proper industry for the production of high-quality goods. Nepal uses traditional technology for the production of goods and this is also the main problem of foreign trade. Established industries are not functioning smoothly due to various problems like; political instability and transitional period. Exported-oriented industries are not fully developed and established, and most of them are seasonal in nature. So, the export trade of Nepal is very low low and increases the problem of Nepalese foreign trade. 

Some other points of Nepalese Foreign Trade problem;
  • Improper trade policy:
  • Low production:
  • Lack of trade diversification:
  • Tough competition with foreign trade: 
Read More: 10 Measures to Reduce Trade Deficit of Nepal

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