Economic Survival at High Altitudes: Analyzing Informal Economic Systems of Rural Villages in the Mountain Region of Nepal

Abstract

High-altitude communities in Nepal rely on informal economic structures and barter networks to navigate financial constraints imposed by geographic isolation. Limited access to formal banking systems compels residents to exchange goods and services directly, fostering economic interdependence within these villages. This study explores the resilience of these informal economies and their role in sustaining livelihoods under extreme environmental and economic conditions. The study identifies how barter mechanisms operate as substitutes for formal financial systems through qualitative ethnographic research, including field observations and interviews. Findings highlight the role of trust in sustaining trade networks, the adaptability of local economies in response to seasonal fluctuations, and the influence of tourism in shaping informal economic activities. While tourism introduces cash flow, it also creates economic volatility, necessitating hybrid financial strategies that combine barter with limited monetary transactions. The research underscores the effectiveness of informal trade in ensuring economic survival, particularly in remote, resource-scarce environments. However, generational shifts suggest an increasing inclination toward digital financial tools, raising questions about the long-term sustainability of barter systems. The study contributes to broader discussions on economic resilience, financial inclusion, and sustainable development in high-altitude regions. It offers insights for policymakers seeking to support such communities while preserving their adaptive economic structures.

Keywords: Informal economies, barter systems, economic survival