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Promoting Foreign Investment in Nepal: Prospects and Challenges

40 Pages Posted: 14 Aug 2012 Last revised: 28 Aug 2012

Basu Sharma Poudel Sr.

Ministry of Finance

Multiple version iconThere are 2 versions of this paper

Date Written: August 13, 2012


FDI is an important source of capital for economic growth in developing countries. It provides a package which constitutes new technologies, management techniques, finance and market access for the production and movement of goods and services. However, attracting FDI is a major challenge for host countries as it faces the challenge of identifying the major factors that motivate and affect the FDI location decision. The main FDI location factors are cost factors, market factors, infrastructure, technological factors, political and legal factors and social and cultural factor. Despite several conflicting circumstances, Nepal is attempting to sort out overarching issues of FDI concerning with economic development. That's why Nepal is at a point wherefrom it can excel for economic goals via FDI. The set trends illustrate that various indicators pertaining to FDI in the country has been improving since peace process was begun in 2006. This analysis comes to conclusions that the country owns unique advantages and, thereby, opportunities of FDI useful for the country’s prosperity. Yet FDI in the country is not free of challenges, thus, that need to be timely addressed with prudent measures.

Keywords: FDI, TNCs, LDC, SEZ

Suggested Citation

Poudel, Basu Sharma, Promoting Foreign Investment in Nepal: Prospects and Challenges (August 13, 2012). Available at SSRN: or

Basudev Poudel (Contact Author)

Ministry of Finance ( email )

singa darbar

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