Nepal’s long experience with institution-building presents a paradox: while formal structures exist across governance, the economy continues to underperform. Dr. Poudel revisits the trajectory of institutional development, noting how both traditional systems and post-2007 reforms were intended to strengthen state capacity and support growth. However, frequent redesigns, weak coordination, and limited use of institutional memory have often reduced their effectiveness, preventing sustained progress.
He argues that the deeper issue lies in implementation rather than design. Both political leadership and the bureaucracy struggle to align incentives and maintain policy continuity, leading to fragmented decision-making. Combined with over-reliance on external models and restrictive regulatory responses, this has weakened the system’s ability to learn, adapt, and deliver consistent economic outcomes.
The text is an abridged and translated version of the December 2024 edition of Sambaad @ Samriddhi. Sambaad @ Samriddhi is a monthly discussion on contemporary issues held on the last Friday of each month. In this edition, Dr Biswo Poudel shares his reflections on institutions in Nepal and Nepal’s elusive quest for prosperity. The discussion was moderated by Arpita Nepal.