Infographics of the evolution of Nepal’s export destination

Here is a series of infographics that shows the evolution of Nepal’s export destination. The data is sourced from WB data visualizer. It didn’t have such info for gross exports after 2003.

Top 10 export destination in 1990:

• United States (US$ 60.73 million)
• Germany (US$ 44.66 million)
• India (US$ 21.87 million)
• Switzerland (US$ 11.77 million)
• United Kingdom (US$ 7.80 million)
• China
• Iraq
• Italy
• Bangladesh
• Japan

Top 10 export destination in 1995:

• Germany (US$ 131.24 million)
• United States (US$ 103.03 million)
• India (US$ 67.51 million)
• Switzerland (US$ 9.30 million)
• Italy (US$ 7.18 million)
• United Kingdom
• China
• Austria
• Iraq
• Canada

Top export destination in 1998:

It was in 1998 when India became the top export destination of Nepal, thanks to the trade and transit treaty of 1996 (which eliminated value addition requirement for Nepalese exports to India. This provision was replaced with 30% VA in 2000 and Nepalese exports got a hit).

• India (US$ 136.43 million)
• United States (US$ 107.56 million)
• Germany (US$ 103.14 million)
• Bangladesh (US$ 9 million)
• France (US$ 7.36 million)
• Italy
• Austria
• United Kingdom
• Sri Lanka
• Iraq

Top 10 export destination in 2000:

• India (US$ 317.79 million)
• United States (US$ 192.16 million)
• Germany (US$ 105.52 million)
• United Kingdom (US$ 16.74 million)
• Belgium (US$ 11.40 million)
• France
• Japan
• Hong Kong, China
• Switzerland
• Spain

Top 10 export destination in 2003:

• India (US$ 341.79 million)
• United States (US$ 189.73 million)
• China (US$ 22.43 million)
• Germany (US$ 22.11 million)
• United Kingdom (US$ 13.60 million)
• Bangladesh
• France
• Japan
• Italy
• Portugal

Fast forward to 2011 (fiscal year 2010/11), the top exports destination were (total exports amounted to Rs 64.56 billion; data is sourced from TEPC trade data):

• India (Rs 42.87 billion)
• United States (Rs 4.39 billion)
• Bangladesh (Rs 3.47 billion)
• Germany (Rs 2.768 billion)
• U.K (Rs 1.389 billion)
• France
• Turkey
• Canada
• Italy
• China P.R

Overall, the number of countries Nepal sends goods to has increased but an increasing amount of volume (and revenue) is being concentrated to the Indian market. The phasing out of quotas and slashing of tariff rates in the European markets and the US have contributed to declining share of exports to these countries. At the end, Nepalese products could not compete with exports of similar nature from other countries. Here is a blog post on Nepal’s problems with exports.

Can aid tying work when there is pervasive corruption?

It seems like it does. Knack and Smets argue that aid tying can be an efficient response by donors when losses from corruption may rival or exceed losses from tying aid. It might be the reason why technocrats prefer binding conditionality, which politicians cannot breach to harness their vested interests, against loans or grants.

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This study tests two opposing hypotheses about the impact of aid fragmentation on the practice of aid tying. In one, when a small number of donors dominate the aid market in a country, they may exploit their monopoly power by tying more aid to purchases from contractors based in their own countries. Alternatively, when donors have a larger share of the aid market, they may have stronger incentives to maximize the development impact of their aid by tying less of it. Empirical tests strongly and consistently support the latter hypothesis. The key finding---that higher donor aid shares are associated with less aid tying---is robust to recipient controls, donor fixed effects and instrumental variables estimation. When recipient countries are grouped by their scores on corruption perception indexes, higher shares of aid are significantly related to lower aid tying only in the less-corrupt sub-sample. This finding is consistent with the argument that aid tying can be an efficient response by donors when losses from corruption may rival or exceed losses from tying aid. When aid tying is more costly, as proxied by donor country size and income, it is less prevalent. Aid tying is lower in the Least Developed Countries, consistent with the OECD Development Assistance Committee's recommendation to its members.

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