Implication in Economy and Business

Implications in Nepalese Economy

Nepal and other developing countries can benefit from globalization strategies by using or gaining more employment, earnings, new technologies, and skills. The effects of globalization could also be antagonistic. Underdeveloped nations should compete with developed nations in areas like unfair competition, a high risk of brain drain, a widening gap between the haves and have-nots, and so forth. The following consequences have been seen in the Nepalese economy as a result of liberalization, structural adjustment, and privatization under the globalization paradigm:

• Foreign Employment Opportunities
  • The employment opportunities for reasonably priced workers in numerous overseas locales increased with expanding liberalization and globalization. As a result, labor export became mandatory for nations like ours. Nepali workers who work abroad, in East Asia, South East Asia, and the core east are outstanding in this regard. Approximately 1,965,000,000 Nepalese workers are employed abroad (economic Survey 2010/11). One received remittance in 34% of households on average in 2003/04. From the fiscal year 1990/91 to the 2005/06 fiscal year, the progress expense of remittance is 37.78 percent yearly. It demonstrates the significant impact that foreign employment has on the Nepalese economy as a result of the openness of the global labor market. The remittance industry is growing and is expected to supplant other economic sectors in the near future. According to the most recent estimates, the amount of remittances reached Rs. 260 billion.
• Foreign Direct Investment (FDI)
  • The establishment of multinational firms and the flow of foreign direct investment are two of the main effects of globalization (MNCs). Through liberal policies that give privatization in Nepal first priority, efforts have been made that are compatible with globalization to entice foreign investment. Reforms in the industrial sector to attract FDI have been implemented after the restoration of democracy in 1990. There are three laws in effect: the Industrial Organizations Act of 1992, the Foreign Funding and One Window Coverage Act of 1992, and the Overseas Funding and Science Transfer Act of 1992. Even though it had been anticipated that these reforms would spur a significant number of joint ventures, only a small number of enterprises in the financial, manufacturing, and services sectors appeared to be active. Foreign Direct Investment (FDI), which used to be only up to US$ 9 million in 1998, is extremely low in Nepal. In 2002 and 2003, it unquestionably decreased by four and two million (US$), respectively, in part due to the uncertain political obstacle (World Bank report, 2003). The total amount of FDI received up till mid-March 2010 was Rs. 5.2 billion, which resulted in the employment of 140 993 people.
• Foreign Alternate Globalization
  • Other alternative Globalization stresses the removal of exchange restrictions and reduction of import tariffs of the international locations and opens the financial boundaries of the nations. In light of globalization and as a WTO member, the member should not treat foreign goods unfairly. The overseas sites that have comparative product advantages can profit. However, Nepal's trade stability is deteriorating year after year. Today, imports have been rising while exports have been declining. The import/export ratio is almost 3:1, and the exchange deficit has increased. With India accounting for 67.5 percent of the total amount of exchange in the fiscal year 2008/09, the dependence on foreign exchange has been steadily increasing (financial Survey, 2010/eleven). Due to a noticeable fall in exports to India and other foreign countries, the exchange deficit reached Rs. 260 billion during FY 2009–2010.
• Privatization and Industrial Growth
  • Private sectors are consistently favored by globalization. The quality and dealing efficiency of trade hobbies can be increased by privatization and small criteria operating under governmental control. It lessens the burden on the government of budget deficits and pointless financial activity. The Privatization Act of 1993 was implemented in Nepal, and 30 public enterprises have since been privatized. Many of the privatized groups, however, have not operated effectively; some have even been shut down. In Nepal, the procedure has in some ways turned unreasonable. Globalization and industrial sector liberalization barely affect Nepal's industrial development. According to the fiscal survey from FY 2010/11, the manufacturing sector's share in the overall economy has remained below 6.5 percent. The development of the industrial sector is threatened by protracted conflict, frequent worker strikes, and poor infrastructure, particularly loads shedding that typically lasts longer than 18 hours a day.

Implication in Business

The likelihood of operational and financial challenges in the company environment exists. Every company deals with business risks of some kind. Due to their limited financial resources or access to necessary resources, small businesses are typically more vulnerable to industry risk. There are various sorts of company risk in the financial sector. Every threat has a unique impact that business owners must address. The state of the economy as a whole can have an impact on industry chance. Government economic or fiscal policy changes frequently put organizations in risky situations.

• Strategic
  • The sheer number of competitors on the market creates strategic business risk. Growing rivalry can result in a company's market share being cut in half and generating less money. Business owners should invest more time and resources into explaining to customers why their product is superior to rival products. More industry corporations are likewise better equipped than smaller business enterprises to handle increased levels of rivalry. Small businesses could struggle to maintain their financial asset supply. Financial resources are the materials, labor, and other things that businesses need to produce goods or services.
• Compliance
  • In the business world, small enterprises typically have to abide by a variety of federal, state, or local restrictions. High levels of government regulation can put small enterprises at greater risk. To make sure their business is compliant, business owners must periodically research regulations and create trade policies or systems. Small businesses may simply need to invest more money and resources in adapting their operations to meet the requirements of new regulations. Industry owners have significantly less money to increase production output or expand business operations since they are spending more money to comply with executive requirements.
• Financial
  • Financial threat includes losing revenue from customers' sales or having to meet stringent credit requirements. Industry owners may simply sell inventories or other products to customers at reduced prices in an effort to make a livelihood to cover operating costs. Earnings on a balance might also lead to complex business situations. Companies not only need to discover ways to get paid, but they also risk losing money if customers stop paying their bills in the future. Strict credit standards may restrict the number of loans available, raise interest rates, or produce other negative financing conditions for enterprises.
• Operational
  • Operational business threat is the likelihood that a company may experience deteriorating circumstances in their creation process. Theft, damaged equipment, and ineffective facilities are some operational industry risks. Construction output will decline, consumer goods will be of poor quality, and construction efficiency will suffer for business owners in industries with high operational risks. These circumstances can give a rival the chance to enter and steal market share from the company. If businesses have to consistently spend money on fixing or resolving operational problems, they may also experience rises and financial hazards.

References

Flippo, Edwin B. Personnel Management. London: Oxford Press, 1980.

Gynwal, Ram Prasad. Know Nepal. Kathmandu: Bhundipuran Prakashan, 2012.

Hamilton, Francis B. An Account of the Kingdom of Nepal. New Delhi: Manjushri Publishing House, 1971.

Heywood, Andrew. Politics. New York: Palgrave Macmillan, 2002.

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