A comparative study of chinese and Indian and investment in Nepal after 2008

Abstract

For developing nations, foreign direct investment (FDI) is crucial in promoting industrial growth and overall economy. FDI is viewed as significant source of inflow of capital, new technologies, and managerial skills. Nepal is one of the least developed countries with a large saving-investment gap and a low GDP. Nepal is located between two of the emerging economies of the world, India and China. India and China remain the top contributors of FDI in Nepal over the decade. This research aims to examine the total FDI made by China and India in Nepal after 2008. It also studies trend of investment in Nepal and attempts to identify major factors that motivate and affect the possible incoming FDI in Nepal. The author used both quantitative and qualitative research methodologies to get an answer to the research question. FDI data from India China in Nepal form the year 2008 to 2021 was analyzed. The study shows that in the last thirteen years China’s FDI significantly grew while Indian FDI decreased in a staggering amount. In the year 2008 Chinese FDI was merely Rs. 231.3 million while India FDI was Rs. 3.6 billion. While coming to 2021 Chinese FDI stood as Rs 22.5 billion and Indian FDI stood at Rs. 726 million. The interaction between Nepal and China grew over the past decade however Nepal- India relations saw many ups and downs in the same period of time. Nepal offers tremendous amount opportunities of FDI. Nepal still has a long way to go before it can fully profit from its location between two economic powerhouses and exploit its potential.