Applying the Growth Identification and Facilitation Framework to Nepal, By Dr. Jiajun Xu and Sarah Hager (CDP Background Paper No. 35)

This paper analyzes opportunities for growth in Nepal by applying the policy tool of New Structural Economics ? Growth Identification and Facilitation Framework (GIFF). Drawing on firm level surveys, stakeholder interviews, and existing datasets it aims to contribute to policy discussions in Nepal and to demonstrate the use of the GIFF for other least developed countries. The report argues that Nepal should seek to capture industrial transfer from China to establish a foothold in global value chains, create employment and catalyze structural transformation. The report identifies product-level advantages arising from preferential market access and sector-specific binding constraints, and proposes how to use Special Economic Zones to mitigate identified constraints to set Nepal on a path of structural transformation.