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Bidenomics and Nepal

Bidenomics and Nepal

Directly, Nepal may stand to benefit little economically from the victory of Joe Biden, the US President-Elect. But a reassurance from him that multilateralism, globalization, and liberal trade policies are the fundamentals of our time and will thus be protected will have far-reaching consequences in the shaping of Nepal’s economy.

In more concrete terms, countries like Nepal need strong multilateral organizations that provide financial and technical support for economic development, especially to those at the bottom of the socio-economic pyramid. There will be both direct and indirect benefits as multilateralism and globalization will be stronger in the Biden era. More specifically, America’s role in international development will be reshaped as Biden will try to restore his country’s international image by helping developing countries come out of poverty, if only to better protect liberal values and democracy.

Nepal has been hesitant to approve the Millennium Challenge Corporation (MCC) compact due to its connection with the US Indo-Pacific Strategy (IPS), even though the MCC was thought of much before the IPS emerged as an idea. I believe, under Biden, American foreign policy will be more in favor of supporting other countries’ economic growth in good faith than by forcing them to choose between extremes. This new narrative emerging from Washington will help Nepal approve MCC projects that have direct impact on Nepal’s long-term development. With the MCC’s parliamentary approval, Nepal will not only have access to US$ 500 million for critical infrastructure development but also cement the foundation for cross-border electricity trade with India. If the winter session of the parliament makes a headway on the MCC, projects under it will be completed by the time Biden completes his first stint at the Oval Office.

Another area Nepal will benefit in is mitigating the risk of climate change and its impact in agriculture in hilly and mountain regions. Globally, environmentally-vulnerable countries like Nepal will benefit from better international cooperation on climate change as Biden has vowed to implement the Paris climate accord. Having a global leadership working to achieve climate change targets will help Nepal be more effective in safeguarding its own interests in climate change. Nepal suffers high economic cost of climate vulnerabilities and extremes. An estimated direct cost of these impacts is equivalent to 1.5 to two percent of current GDP, rising to five or more percent in more extreme years.

Trade will be another area where Nepal can benefit from the trade-friendly American leadership. The US is third biggest export destination for Nepal after India and the EU. Similarly, the US is the fifth most attractive markets for 12 key goods and services with potential from Nepal, as identified in the Nepal Trade Integration Strategy (NTIS). With Biden, the international trade will be reshaped with more access to American markets for Nepal. Biden’s liberal trade policies will be highly beneficial—if Nepal also works sincerely to optimize its market conditions.

Above all, young Nepalis aspiring to pursue higher education will have greater access to world-class academic institutions as they will get more financial support. Biden as president will certainly increase the size of the pie of the research and development fund. Modern Nepal has benefitted immensely from the American education system with more people being trained in these institutions. That is critical for Nepal, which has been unable to establish even a single quality academic institution.

A fairer and orderly global system with a moderate and centrist leadership is in everyone’s interest. But the challenge is to create opportunities for everyone in a more democratic set up. Although democracy gives us more choices and more ways to work and live, it is also vulnerable to populists and authoritarians. The only way to protect democracy is through economic development that creates opportunities for each citizen to have a diploma. The Biden era could help Nepal in this crucial aspect as well.