3. Domestic factors leading to Economic Development
Improvement of the educational system
According to Hugh Wood, prior to 1951, education in Nepal was practically nonexistent. There were six high schools, four of which were in the central Kathmandu valley. There was one small college in the capital. It is estimated that there may have been about 100 primary schools, but many of these were little more than tutoring classes. Education was discouraged, even prohibited except for sons of the government officials. However, it started changing in 1954, when the Minister of Education appointed a 46-man National Education Planning Commission in order to further improve the educational system in the country.
In 1951, Nepal only had 9,000 students in primary school, 1,700 in secondary school and about one hundred in two undergraduate colleges. From 1971 to 2001, primary school numbers grew from 400,000 to 3.9 million, secondary school increased from 120,000 to 1.5 million and post-secondary level increased from 17,000 to 210,000. Literacy rates improved greatly, from 23 percent in 1981 to 54 percent in 2001. It the graph above, it is possible to observe that the increase in literacy rate, a result of local efforts in improving the educacional system, was followed by increase in the GNI/capita.
Access to New Technologies
According to Bhuju "Nepal has been a late starter in modem science and technology. In pursuance of self- reliance, it developed technological capabilities in some specific areas such as agriculture, civil engineering, architecture, metallurgy, water management, medicine, textile and paper manufacture, dyeing and food technology."
One of the main reasons behind Nepalese technological delay is the fact that it was isolated for over a century, coinciding with the Industrial Revolution in Europe and the colonial incursion in India, being deprived from advancement.
After the consolidation of Democracy in 1950, Nepal embarked on the path of modernisation. Some important changes were:
- Initiation in S& T activities, along with the inception of a development plan, in 1956;
- Nepal's new constitution, promulgated in 1990, has emphasised the importance of S&T explicitly by including a Directive Principle to promote its advancement;
- Major S&T organisations, including a science academy, the Ministry for Science and Technology, and several research centres and institutions for higher education in science have evolved during last five decades.
Access to microfinance
The microfinance sector was served by cooperatives (1950-1960s) and normal banks (1970-1980s) until 1980, when a number of pilot projects and initiatives were implemented to introduce the financial and banking services to help poor and women. However, these projects were not able to fulfil the needs of a large parcel of population.
1990s - 2000s, the government strengthen the Microfinance Institutions, with the formation of five Regional Development Banks (RDBs) in each Development region. The system was based according to the Grameen model. Eventually, these Regional Development Banks were transformed to Microfinance Development Banks (MFDBs) after being privatised and licensed as class 'D' financial Institutions.
Later on, other Microfinance Development Banks, Chhimek Bikas Bank Ltd. (CBB), Deprosc Bikas Bank (DBB) and Nerude Microfinance Development Bank Ltd. (NMDB), were formed.