When I engage in intellectual interactions like this, I often find myself asking a personal question: Had I not chosen the path of politics, what would I have been doing today?

I cannot know the exact answer, of course, but I can imagine myself working in the academic world much like yours—teaching in universities or institutions such as the IITs, engaging in research, mentoring students, and participating in serious intellectual debates and discussions like this. 

At a certain point, however, I felt that knowledge alone was not enough. Understanding the world has its limits. The real challenge lies not only in understanding, but in changing it as Karl Marx famously said “The philosophers have only interpreted the world, in various ways; the point, however, is to change it”. 

When I looked around me, I saw that my country was at the bottom of the ladder of development. It lacked political freedom and democracy. We had deeply unjust political, economic and social systems. Achieving political freedom and democracy and ushering in rapid socio-economic transformation became the foremost priority when I was a youth. Therefore, I chose the path of change—and revolution—over the path of knowing and understanding.

I was driven by a conviction that still guides me today: for intellectual work to flourish, for innovation to take place, for radical socio-economic transformation, politics must take the right course. Democracy is not only about periodic elections; it is about protecting intellectual freedom, academic autonomy, and the right to question authority. It is about people’s participation in state affairs, inclusion and social justice. Much of my life has been shaped by the struggle for that principle.

I am now 71 years old. When I look back on my life, I see profound transformation—not only in my own journey, but in the lives of ordinary citizens of Nepal, South Asia and the world. But it is not enough.

I was born into a low-income family in a rural village, educated in a local school, and eventually became part of a people’s revolution that reshaped Nepal’s political transformation. I have experienced leadership in times of revolution and peace, and I have participated in the historic task of constitution-making in Nepal. I am now just a campaigner of progressive democratic politics and social justice.

Within a single lifetime, we have witnessed transformations our ancestors could not have imagined.

And yet, when we compare Nepal’s as well as much of South Asia’s pace of progress with that of the wider world, the picture becomes uncomfortable. Compared to developed nations, our progress has been terribly slow. We still face major challenges in poverty reduction, employment, education, health, equality, and governance. A single indicator of South Asia as the biggest pocket of global poverty (40%) is a big slap on our face.

So, the question arises: Why are we lagging behind?

Historical Context

To answer this, we must step back in history.

Before the Industrial Revolution, Asia was the center of the global economy. In 1820, China produced an estimated 33% of world GDP and India about 16%. Together, they accounted for nearly half of global GDP. Asia was not only economically dominant—it was intellectually and technologically advanced.

For example, Ancient China gave the world the “Four Great Inventions” –the compass, gunpowder, papermaking, and printing-- innovations that had a profound impact on the development of civilization throughout the world. Ancient India pioneered fundamental ideas in mathematics and astronomy, including the concept of zero. Well into the eighteenth century, Asia was a leading innovator and economic powerhouse.

So why did Asia fall behind after 1800? Precisely after the Industrial Revolution.

The answer lies not in culture or intelligence, but in institutions. Europe’s rise followed the Industrial Revolution—but more importantly, it followed the emergence of political and social systems that encouraged scientific innovation, debate, and risk-taking. Asia missed this leap initially. As Western nations industrialized, Asian giants stagnated under rigid hierarchies and (in most of South Asia and India’s case) colonial extraction, and centralized power. For example, between 1780 and 1860, India was transformed from a leading exporter of textiles to a mere supplier of raw materials and an importer of British manufactures. The once wealthy Asian economies saw their global share collapse – by 1950 China and India’s combined GDP was under 9% of world output. 

This marked the beginning of what we now call the Great Divergence.

What enabled Europe (and later America) to surge ahead in the 19th and 20th centuries?

Beyond steam engines and factories and advantage of local coal in Britain, it was the ecosystem of innovation powered by more inclusive institutions and freedoms fueled by political and colonial capacity. Western societies fostered environments where people could publish ideas freely, criticize authority, experiment, and pursue enterprise. Inclusive political institutions and Enlightenment values such as rule of law, accountability, freedom of inquiry created fertile ground for scientific and economic breakthroughs.

Nobel Prize–winning research by economists Daron Acemoglu, Simon Johnson, and James Robinson confirms this. Nations prosper under inclusive institutions and stagnate under extractive, autocratic ones. Where power is concentrated and creativity constrained, innovation withers.

In much of Asia, absolutist monarchies, traditional hierarchies, caste systems, colonial regimes and rules, and feudal governance restricted social mobility and stifled broad-based development. 

Nepal, under monarchy and feudalism well into the 21st century, suffered similar constraints, limiting not only access to education, entrepreneurship, and innovation but also minimal public investment in essential infrastructure, science, and education, resulting in decades of economic isolation and underdevelopment.

In short, where the West built an “innovation ecosystem” – driven by freedom to criticize, vote, invest, and create – much of Asia remained hampered by extractive or feudal institutions that throttled broad-based progress. Therefore, Western dominance after 1800 was not inevitable—it was institutional that unleashed human potential.

Supporting this view, Joel Mokyr, Philippe Aghion, and Peter Howitt, the winner of 2025 Nobel Prize in Economics highlighted the role of innovation and creative destruction that sustained prosperity flows from continuous innovation disrupting old ways.

Mokyr highlights how the Industrial Revolution succeeded once society embraced scientific explanations behind technology and openness to new ideas. Aghion & Howitt formally modeled Schumpeter’s concept of creative destruction – new technologies relentlessly replacing old ones – as the engine of long-run growth. 

Sustainable innovation cannot thrive without fundamental prerequisites such as inclusive democracy, freedom of inquiry, legal stability, institutional independence, and generous state support. In General, the West’s more democratic political systems allowed creative destruction to propel it ahead, whereas in Qing China or colonial India and South Asia, entrenched authorities often resisted or controlled new innovations.

Fast forward to the present – however, we are witnessing Asia’s return in the global landscape. 

China and India began rising only after achieving political independence and policy autonomy. After, China’s independence in 1949 through communist revolution followed by post-1978 reforms, China has achieved an economic miracle lifting hundreds of millions out of poverty.  At present, China is the world’s second-largest economy and the leading manufacturer. It has also become an innovation powerhouse in electric vehicles, renewable energy technology and even Artificial Intelligence. 

Similarly, India too has emerged as one of the fastest-growing major economies. Relying on its huge human resources and restructuring its economy periodically, India has unleashed a vibrant technology and startup ecosystem. India has recently overtaken the UK to become the world’s 5th largest economy. Cities like Bengaluru (Bangalore), Hyderabad, and Mumbai have become major technology centers, hosting R&D labs and thousands of new ventures. 

Both China and India underscore how political independence and governance changes unleashed development.

However, Asia’s innovation today is not only high-tech—it is frugal, social, and locally rooted too. Nepal’s community forestry program is a powerful example. Forest cover increased dramatically within two decades doubled from 26% of the country in 1992 to around 45% by 2016 under community stewardship. 

Nepal was historically late. Nepal got a 40-year late start compared to India or China. Our obsolete monarchy ended only in 2008. This late political opening partly explains why Nepal’s economic takeoff has lagged. However, with inclusive democracy and relative peace now in place, Nepal too can leverage the lessons of its neighbors. The recent GenZ uprising has provided a strong wake-up call.

National Context

Nepal’s challenge today can be summarized in four words that starts with “I”. I call them the “Four I’s” – that hinder our quest for accelerated development and prosperity: Institutions, Integration, Inclusion, and Innovation.

• Institutions: As Nobel laureates remind us, institutions underpin long-run prosperity. Nepal’s institutions – from bureaucracy to rule of law – need drastic overhauling and strengthening. We suffer from political instability, frequent government changes, and weak governance capacity. Over 30 governments in 30 years have made it hard to sustain consistent economic policies. Endemic corruption, cronyism and red tape remain the biggest challenges, undermining public trust. Without strong democratic institutions, even good policies falter.  We need to build institutions that are more accountable, transparent, and efficient.
• Integration: Nepal, sandwiched between two huge states of China and India in the lap of the mighty Himalayas, has remained largely isolated for millennia. When it got integrated late in the second half of the 20^th century, it was caught I the trap of dependency and unequal exchange – net exporter of labor and importer of finished products. This needs to be corrected and judiciously integrated.

Nepal has one of the lowest levels of investment (especially foreign investment) in South Asia. Our businesses are barely integrated into global value chains. This capital drought limits access to new technologies, expertise, and markets. Without boosting investment – both domestic and foreign – Nepal cannot build the infrastructure, factories, and enterprises needed for faster growth. We must improve our internal and external integration and investment climate, from energy and transport to reducing red tape, to attract capital, technology and market for rapid economic transformation.

• Inclusion: Development must include all sections of society, but Nepal still has significant exclusion and inequality. Historically marginalized groups – by caste, ethnicity, gender, or region – have unequal access to opportunities. For example, the Madhesi plains communities, Dalits, and some indigenous groups lag in education and income compared to national averages. True inclusive growth means bringing these left-behind groups into the fold – through better public education, health, affirmative policies, and financial inclusion. Inclusion is not just moral, it’s economic: a nation cannot prosper fully if sizable minorities are uncared and underutilized. An inclusive Nepal would tap the talents of all its people, accelerating innovation and social harmony. 
• Innovation: Finally, Nepal needs to significantly ramp up innovation. We have an enterprising population but our domestic innovation ecosystem is nascent. Investment in research and development (R &D) is minimal (around ~0.3% of GDP) and our universities lag in research output. This innovation deficit stems partly from the above factors – low investment in technology, weak higher education, and institutions that don’t incentivize creativity. 

Some promising signs include a budding tech startup scene in Kathmandu and youths innovating in fields like robotics and app development. Yet they face hurdles: financing constraints, lack of mentorship, and limited market size. Government can help by establishing innovation hubs, R&D grants, and better internet and STEM education. We should also tap into our diaspora scientists and entrepreneurs to transfer knowledge.Without innovation, Nepal risks stagnation in low-productivity activities. With innovation, we can leapfrog and compete globally.

In summary, Nepal’s path to prosperity lies in addressing these four I’s together – building robust Institutions, improving Integration, fostering Inclusion in growth, and unleashing Innovation.

Global Context

As we strive for progress and development, we must also confront contemporary global crises that cast a shadow on our future – challenges that affect not just Nepal or South Asia, but the entire world, including powers like China and India. These include a deepening inequality crisis, looming ecological collapse, and the disruptive risks of the digital age. 

Let’s unpack them quickly:

Inequality Crisis: Economic inequality has reached extreme levels worldwide. Wealth is concentrating in the hands of a few at the expense of the many. Astonishingly, since the year 2000, the richest 1% of the world’s population have captured about 41% of all new wealth created, while the poorest 50% of humanity received only 1% of that wealth. This is a profoundly unsustainable and unjust trajectory. Such inequality isn’t just a moral issue – it undermines social cohesion, economic stability, and democracy.

Without action, inequality will further fracture societies and fuel populist anger or never-ending conflict.

Ecological collapse: We are in the midst of a planetary ecological emergency. Climate changeis already causing devastating impacts – more intense floods, droughts, heatwaves, and melting of Himalayan glaciers that millions depend on for water. At the same time, we are witnessing mass biodiversity loss – a sixth mass extinction. A landmark IPBES report revealed that around 1 million plant and animal species are at risk of extinction, many within decades, due to habitat destruction, pollution, overexploitation, and climate change.

Pollution is another facet – toxic air in our mega-cities, plastic-choked oceans, and contaminated rivers including Ganges, for example, endanger health and livelihoods. Water stress is growing: South Asia faces critical groundwater depletion and water conflicts could intensify as populations and demands rise.

These ecological challenges are all interlinked and global in nature. Tackling this requires international cooperation and sustainable development strategies. South Asia must pursue a path of green growth – investing in renewable energy, protecting forests and water. 

The triple planetary crisis namely climate, biodiversity and pollution are urgent; addressing them is not a luxury but a survival imperative.

Digital disruption and the threat to democracy: The rapid advance of digital technology, while bringing many benefits, has also unleashed serious disruption and risks. Automation and artificial intelligence (AI)threaten to displace millions of jobs worldwide through increased productivity with fewer workers from factory robots to AI chatbots. Without preparation, this could worsen inequality and unemployment. 

We must ensure that AI augments human work and that gains are shared.

On the societal front, the digital revolution has a dark side for democracy. Social media, while empowering voices, has also become a vector for misinformation, hate speech, and polarization. 

In many countries including mature democracies, elections have been marred by online propaganda, troll farms, and fake news designed to manipulate public opinion. Digital surveillance is another grave concern. Authoritarian governments are using new tech tools to monitor and control citizens on an Orwellian scale.

Societies must find the balance – leveraging digital innovation for good governance and economic growth, while safeguarding rights and ensuring tech is aligned with democratic values.

South Asian Context

Let us come back to South Asia. 

South Asia is now at the cross-roads of tremendous opportunities and challenges. A series of youth and mass revolts in recent years from Pakistan, Sri Lanka, Bangladesh to Nepal have cautioned us to see the writing on the wall. It is the test of a good leadership to turn the challenges into opportunities on time. 

South Asia’s Major Challenges:

-       40% of the world’s poor are concentrated in South Asia.

-       Persistent regional tensions, domestic political instability and ethnic conflicts pose significant risks to economic momentum by undermining investor confidence and integrated market. 

-       Endemic economic, social, cultural inequalities in terms of class, caste, gender, region, faith etc. pose a threat to inclusive democracy and sustainable development.

South Asia’s Key Comparative Advantages:

1. Demographic Dividend:
   South Asia accounts for over one-quarter of the global working-age population. This demographic profile offers a substantial labor supply for manufacturing and services, alongside a large and expanding domestic consumer market.
2. Cost Competitiveness in Labor-Intensive Activities:
   Wage levels remain considerably lower than those in China and most Southeast Asian economies. This cost advantage enhances the region’s competitiveness in industrialization and global services outsourcing.
3. Strategic Geographic Location:

• Access to Critical Maritime Routes: Situated along key sea lanes linking the Middle East, Africa, and East Asia, South Asia holds significant potential in logistics, transshipment, and international trade facilitation.
• Proximity to Major Growth Poles: The region benefits from geographic proximity to China, Southeast Asia’s rapidly growing economies, and the Middle East, strengthening opportunities for trade, investment, and regional value-chain integration.

4. Cultural and Diaspora Capital:
   A large and economically active diaspora contributes through remittances, foreign direct investment, knowledge transfer, and access to international business and innovation networks.
5. Potential for Digital Leapfrogging:
   The region—most notably India—has demonstrated strong capabilities in information technology and digital services, offering opportunities to bypass traditional development bottlenecks through technological adoption and innovation.

B.      Some Policy Options

1. Decisive Action on Binding Constraints:

·      Large-scale, time-bound investment in physical infrastructure, particularly energy and transport connectivity;

• Deepening regional trade integration to expand market size and enhance economies of scale;
• Comprehensive land, labor, and regulatory reforms to improve the investment climate and productivity, and ensure social justice;
• A transformative improvement in the quality of education, skills development, and vocational training.

2. Political Stability and Reduced Geopolitical Tensions:
Persistent regional tensions, domestic political instability, and ethnic conflicts pose significant risks to economic momentum by undermining investor confidence. Sustained growth therefore depends on political stability, effective governance, and enhanced regional cooperation.

Concluding Remarks

Let me conclude with a few lessons.

First, history is not destiny. Asia’s decline after 1800 was not permanent – with determination and the right choices, our countries reclaimed their agency and are rising again. Nepal’s late start can be overcome by leapfrogging in certain areas.

Second, freedom and innovation must go together. Political freedom is inseparable from economic and intellectual freedom. South Asia’s future depends on nurturing inclusive, democratic systems where every individual can reach their potential. Political freedom is not a luxury; it is part and parcel of economic and creative freedom.

Third, sustainability is the only path forward. There will be no prosperity if we destroy our environment. South Asia must unite to tackle climate change through regional cooperation on renewable energy grids, water sharing agreements to manage our common rivers, and disaster preparedness. We share the Himalayas and the monsoons; we share the air and the seas. Collaboration is the way to preserve these life-support systems.

Fourthly, we must recognize that the challenges of inequality and digital disruption are global, and so are the solutions. South Asia, with its vast human capital (a quarter of the world’s population!), can be a leader in championing a more just global economy.

Finally, scientific worldview is the key to understand the world objectively and change it sustainably. Hence, we may have to develop our ideological-political tool based on the latest inventions of physical, biological, social and cognitive sciences. For this, we may have to go beyond the traditional binaries of market fundamentalism or liberalism and state fundamentalism or communism frameworks. This advanced worldview could be tentatively termed as ‘scientific humanism’. This could show the path of harmonious and sustainable co-existence of whole humanity. 

So, let us have a common dream. Envision a future South Asia where innovation is directed toward human development: where a Nepali start-up designs a low-cost solar pump that revolutionizes farming across South Asia; where an Indian AI expert develops an algorithm to improve early disease diagnosis for the poor; where a Bangladeshi entrepreneur invents a new material for flood-resistant housing. And so on with Pakistan, Sri Lanka, Maldives, Bhutan. Envision a South Asia where freedom is safeguarded: where inclusive democracy flourishes in all countries, governments are accountable, and citizens can speak their minds without fear; where digital literacy and critical thinking immunize the public against disinformation. Envision a South Asia that is sustainable and resilient: with clean energy powering our growth, forests and biodiversity protected by enlightened policies, and cities that are smart and livable. Envision our enlightened and energetic youths of South Asia assuming the leadership of this new era of Great Convergence with utmost success.

The vision is ambitious—but achievable.

We are heirs to great civilizations of knowledge. Let us build knowledge economies worthy of that heritage. We have fought hard for democracy. Let us now use it wisely.

Keynote speech delivered by Former Prime Minister Baburam Bhattarai at IIT Bombay—TechFest 2025]