Against all odds - What is driving poverty reduction in Nepal?


The year 2015 was rough on Nepal. The catastrophic earthquakes that struck the country in April/May caused widespread destruction of life and property and was followed by disruptions in the south that brought cross-border trade with India to a complete standstill for 4 months. As dramatic as these recent shocks have been, Nepal is no stranger to conflict and fragility. A 10-year violent Maoist conflict ended in 2006 but the ensuing years of drafting a new constitution were turbulent; politics often dominating the discourse as opposed to economics. But despite these unfavorable odds, Nepal made rather surprising progress on improving living standards and reducing poverty.
Between 1995 and 2010, absolute poverty – measured as the proportion of people living below the national poverty line of Rs.19,261 per person per year – declined steadily by around 2.2 percentage points a year. This helped the country meet the MDG target of halving income poverty by 2015 quite comfortably. Living standards improvements were realized not just based on income or consumption but also along multidimensional measures of well-being that take into account access to essential services such as education, health and drinking water and sanitation. What was behind this progress on poverty reduction Nepal achieved amidst a violent conflict and a tumultuous post-conflict recovery?