Influx of Kathmandu: A Perception from New Economic Geography

A taxi ride down any street in Kathmandu in the sweltering heat or monsoon rain could end up in a few seconds into the ride. It is not the heat or the rain that found a flaw in the car engine that forced the journey to end abruptly at any location, at any time but it is the traffic jams which has not spared even the gullies and alleys of the city. Everyone who has been to Kathmandu can related to this problem yet no one might have even bothered to look at this problem of population influx in Kathmandu from an economic perspective.

It might seem strange to a layman or someone unfamiliar with one of the works of ingenuity by a genius Nobel Prize winner, Paul Robin Krugman, but yes this madness in the streets and the income of people in the capital city of Nepal can be explained, as is obvious with the theories linked to the theory of New Economic Geography done on developing economies, with this theory of economics.

This could be explained with analogies drawn upon the two factors of discussion here, namely, New Economic Geography and the current scenario of Nepal with prime focus on Kathmandu. So first delving into Economic theory would require outlining what the basic idea is behind the theory. NEG basically explains the agglomeration: process of gathering into a mass- centralization of people and resources in a urban location (my personal definition) as an outcome of contributory factors like economies of scale, transport costs, price differentials inherent to large market size. So it explains why a economic region, economically more prosperous and profitable than other regions tend to attract more prosperity and productive economic development. So instead of developmental economic contributory factors like production and service spreading out, they tend to concentrate in a few countries, regions and cities, which will be more populous and have higher income than rest of the geographic locations.

Drawing this analogy would require a scrupulous eye to retrospect the history of Nepal and its strong inter linkage with Kathmandu at a glance. In the medieval and ancient past, Nepal was merely a small coherence of three smaller states or cities: Kantipur, now Kathmandu, Patan and Bhaktapur; rest of the cities were non existent in the then Nepal. Production and economic development has been confined within these three cities with Kathmandu the more formidable among the three. Even through struggle of years in battle, Kathmandu was, has and will, unless until the government thinks otherwise, be the capital of Nepal. So it has enjoyed prosperous times as the central hub of the entire nation.

It is this reason coupled with centralized political structure, most of the major businesses are headquartered here. All of the ministries are here and with this, almost 90% of the bureaucrats dwell in Kathmandu. Home, temporary or permanent, to more than 4.5 million people of the total of about 30 million population, Kathmandu is the ultimate dream of dwellers from rural regions and other cities. Kathmandu has all the jobs in the world for more of the Nepalese poor and middle class. Yet instead of companies seeking more opportunities in term of human resources, natural resources, and other facilities are reluctant to step beyond the periphery of the city. Hence, less job opportunities in other parts of the nations force more people to flood into the city. So what is the reason behind this reluctance of most companies except few manufacturing conglomerates? This problem is more evident in service industry. The answer is the theory of NEG.

The ever so growing service and business portfolio of Kathmandu has lured many companies to operate in Kathmandu. With more people living in the city, human resource is available here in abundance. The availability of transportation facility has made every street, corner or alley accessible to the city dwellers and manufacturing and service companies. This, accounting for the inflation in transport fare and the per capita GDP growth rate of residents of Kathmandu, has made transportation cost relatively cheaper, note that it is not lower. More people are seen adjusting themselves into the crowded micro buses but their numbers are growing exponentially too; for a comfort seeker micro bus and bus rides appeal less, yet hapless as s/he is, s/he has to wait for long hours in ques for those public transport. This portrays the magnitude of crowd influx in the city; yet people are happy because they are paid higher than anywhere in the country for the same job if they had one as same; the per capita income of residents of Kathmandu is higher than other cities.

This influx of people has seen boom of service sectors like Hospitals, Schools, Colleges, IT offices, and others alike. More people demand higher for these services which aptly backs up the fact that the market place has become bigger and so there is more price differentials as can be inferred from the theory. Even manufacturing plants are lured into operating in the city itself with the current trend of housing sector boom exemplifying the effect of growing market size, which grows evidently with surge in population. The market is growing and so are the market players taking Kathmandu the way of perfect market competition from price and product monopoly en route to relatively cheap products bearing in mind the inflation, apparent in Nepal, more so in Kathmandu. These are only instances of businesses which are creating sumptuous lifestyle for Kathmandu dwellers- a temptation for rest of the population.

With contribution from all these factors scale economies are not too far-fetched, as a matter of fact many companies enjoy this business luxury created with good strategical business planning for their businesses. These very economies of scale have balanced the cost of luxury with factor of inflation minus the factor of income. If we draw a relation between these factors we could say that Cost of Luxury (L) is a function of economies of scales ( E_s), inflation (π in macroeconomics), income (Y) with inverse relation of L with E_s and Y, and direct relation with π; higher the economies of scale and income lower will be the cost of luxury and higher the inflation the same cost will be higher too. As is implicit to the definition of economies of scale, it is evidently achieve when resources like labor, capital and others are available in abundance for full utility. 

So factors like these contribute to trade opportunity maximization in Kathmandu as compared to other parts of the country. Considering all these factors, a micro bus ride is bound to be more crammed than now even if their numbers grow exponentially and the streets will be invaded by more motorbikes, an ominous sign of growing middle class, scene palpable in any developing or underdeveloped economy. Then, a solitude seeking soul wanting to dwell the city for thoughts, which could inspire him/herself to write creatively or innovate, in a cab would be less likely to contemplate ideas than indulging in swearing at the busy traffic jams. Yet s/he is unaware that this nuisance is called agglomeration, a phenomenon studied from the perspective of New Economic Geography in economics.

Economic Development Emanates from the Disgruntled Physiological Needs

Most people read about the Maslow’s Need Hierarchy Theory but they rarely think that economic development emanates from these very inadequacies. Most people will basically disregard this thought saying it is not in their scope of interests let alone delving into the relevance of this hypothetical statement.

Countries like Nepal lag behind most developing countries in GDP and other economic indicators because the outcries of the hungry, the unclothed and the unsheltered majority groups are smothered underneath the moan of desperation of the middle class to step beyond the pretentious dreams of macroeconomic prosperity.

Governments come up with different policies and plans to outfox these physiological shortcomings from Maslow’s Theory into retracting its ill-effects and bestow economic prosperity in the country. In the process the more important issues like physiological needs elude their over optimistic and over ambitious plan of actions.

Instead of focusing on satisfying the physiological needs, the government focuses on developing the supplementary courses of actions like greater access to education for the impoverished, industrial and commercial development, greater access to information and technology. This draws an imaginative mind metaphorically to a question about whether it is a correct measure for a doctor to prescribe vitamin supplements to a starving person.

One would be compelled to think about the irrelevance of such approach taken by governments of developing and under-developed nations across the world where issues with such extraneous approaches to poverty alleviation are preposterously rising with quite a lot of intensity. They invest heavily on all these supplementary plans without thinking what could be the really right solution.

They think the path to development is carved by virtue of enhanced working and living condition for the middle class, where they could work harder with the hard earned degree they value the most and earn better to live better later. Yet they foresee the world as being a battle ground of middle class people fighting to attain the state of high class people and in the process oversee that the real world is still struggling to emerge out clean from the dearth of poverty where starvation prevails over needs for education let alone better education.

People at the upper levels still fail to realize that the need of the hour is to satisfy people’s need for food, clothes and shelter where education is a far fetched solution that will take some years in taking its full effect. They have to realize that the problem is rooted deep in the foundation and that policies have to be focused on eliminating those basic problems.

It is about time they thought what Maslow so rightly stated with a little more inference from educational perspective, here. How would someone who is hungry, doesn’t have clothes, and is homeless going to focus on education? So promoting education to fight off poverty in a pro development movement is not what is needed and never was. It is only a catalyst that could trigger an avalanche effect of economic prosperity in a country.

So what could be the possible answers to these questions raised about what should then be actually done to attain economic development? For me it should be one that talks about full fledged packages that is focused mainly with securing a meal for the impoverished, a shelter s/he can take shade in and clothes to wear and incorporates education promotion with a provision for total employment, which could assure that all these requirements are met every time.

It could be the other way round too; in that it could be in the form of education promotion package securing employment right away for at least one member of the household en route to fulfillment of those physiological needs.

If development is to be achieved, it is not the middle class that should be targeted but it should look upon creating national provisions, acts and regulations in favor of packages that incorporate all necessities: basic to supplementary; the doctor should either give food to the famished along with vitamin supplements to ensure better health or prescribe the starved individual vitamin supplements that intrinsically buys him/her the food, s/he longs for so much.

A closely knit metaphorical example draws upon the following conclusion. Life is impossible without food, the most basic of physiological needs, and physical growth is unachievable without nutritional supplements. Growth is hence unimaginable without satisfying the hunger just like development is impossible unless the ravenous souls’ hunger is satiated.

This analogy of physical growth to development and nutritional supplements to education and other supplementary development programs elicits another relationship between failed attempt towards innovation and the disgruntled physiological needs in under-developed countries.

So it is quite evident, “Where unsatisfied needs arise, innovations emanate but these creative ideas vanish when the needs are left unsatisfied for too long because if you don’t eat for too long you become hungry and hunger kills, not just individuals and their creative ideas and also the society’s will and desire to innovate.” This partly explains why poor countries are getting poorer with zero or failed attempts from their societies to create solutions to these issues.

Innovation: an Art, a rare Artifact in Nepal

There was a time when a young teenage boy (me), wanted to become a scientist without knowing what benefits choosing that profession would have or what the repercussion I would have to face when the time came to become one. I wanted to be one of the select few in a fewer select group of scientists who represented Nepal in the global arena of Science and Technology. Now that I am older and wiser to go for scientific research, I opted to wait until I became a scientist; for now I want to explore more before I start my own research work.

By the way I am an engineer, specialized in Electronics Technology. Without wasting much time talking about my academic credentials, let me get to the point. The major point that I am making is that people tend to research when they're still in their premature stage of knowing what their strengths are and their weaknesses, even more intriguing would be to know that research is something you do with a preconceived vision, knowing where you want to end up and instead you deviate from the right path and end up somewhere else, you hadn't imagined possible in your wildest imagination, and invent something out of this world; you create something that no one before you had even realized, let alone imagined.

Having metaphorically defined research, I would like to share a few thoughts with you all; something that I have had for a while but hesitated to share with anyone probably because I feared the thought and the idea would not be able to stir your comprehensive mind. Bottom line: I feared no one would understand. I thought, and I am doing the same: sharing ideas, ideas should be shared, especially in a country like Nepal where not a lot of ideas are brought to limelight and they all fade away with the hunger satisfied with others' leftovers in the dumpster; this is just a metaphor but a little exaggerated, the situation is not that bad, or so I hope. The point I make here is that, need creates ideas, for instance, an idea or a way to light the broken lighter in an last ditch effort to light the cigarette late at night when no stores are open to buy one or you dare not go to the kitchen to fire your cigarette because you're scared your parent would find out that you smoked. This exemplification is typical to a Nepalese teenager whose desires are buried underneath traditional Nepalese family values that bar eligible young teens or even young adults to smoke in front of their families. These are the same values that are guided by traditional beliefs that creativity are for Westerners, mostly American and proliferation through innovation is for the Japanese; they don't believe that even a Nepali can create something out of the blues and prosper by improvising existent ideas, just because there aren't any substantiating evidences when this rudimentary sentiment has been proven wrong. The basic message to be derived out of this paragraph is: need creates innovation or idea and Nepal is in dire need of many things from basic necessity to luxury needs, so Nepal is very innovation should find shelter.

So what do we lack then? Firstly, I believe it is interaction that idea carriers have with listeners and encouragement those listeners' listening to those ideas and a nod of approval, saying it is a good idea, will give. This supports the loudest voices claiming Nepalese talent lack the right platform, here in Nepal. This also explains why there is an erosion of Nepalese students and researchers to the east, west, north and south, anywhere but Nepal, itself. Secondly, I believe it has got to do with the fund that is required to finance those costly Research and Development work. If these two problems are solved, half of Nepal's problem would be solved- that of unemployment and underpaid employment opportunities. This conclusion stems from the fact that if ideas materialize and are implemented, newer self fashioned job opportunities are created that pay higher and better than people usually are with their current underpaying jobs, the major cause that has wrecked havoc in Nepal’s fight to emerge out from the poverty line, and in the process better their meager per capita income of $400 (approx.).

So how will these ideas materialize and idea generators get the right platform, the best navigation and the money to go for out-an-out research activities and creative findings. There have been efforts made many-a-times in this regard with efforts from Nepal Academy of Science and Technology (NAST) but its attempts have been in vein. It is just a gathering of highly paid underachieving self proclaimed scientists who are yet to prove to Nepal let alone the world. This has led to failures to confirm the fact that Nepal has the potential and well-groomed undermined prodigies who live in the outskirts of their scientific fundamentals of life in luxury, the people for whom luxury is merely an opportunity to showcase their raw talent and prove their worth. Without much deviation indulging in pointing out the flaws of NAST and what could or should have been, let me turn your focus on to the question as to what has to be done in order to stop this stalemate of hide and seek game of people and ways to realize the ideas or even bring out the ideas from the people who have it.

I also have had this question looming at large for a while and the best I could do so far up to this moment is to point out the direction where the major focus on this quest to congregate right people with the right ideas and the right platform to realize those ideas should be. The focus should be on needs and the requirements of the people or market, not just on any random topic; ordinary people have to be surveyed as to what they think, they lack in technology and service. This involves market study done in the form of ordinary people gathering to share ideas about what they need, what they want and how they want: innovation or improvisation in service or technology. The answer to this could be to improve the accessibility to quality or just plain education for the rural and urban poor in Nepal. The question here is how this would be of any help in this crunch situation of shortcomings of innovations, and ideas that lead to innovations. I am working on this; though I believe I am far off from finding the appropriate answer to solve this riddle of education for the poor to be food for the famished. Another probable solution to this problem could be to sum up an event where ideas meet sponsors; this way people get to interact among themselves where the platform is given to poor who rarely get to think beyond their basic necessity of food, clothes and shelter. For further contemplation on this idea, I have set up a group on Facebook, “Innovators’ Club for Innovations in Nepal”. This is my first baby step to achieving something most intellectuals in various fields in Nepal, from economics to education to science and technology, like NAST, have failed to do, to conjure any thing substantial to alleviate this problem thoroughly analyzed in this read. Keep yourself updated about this group where I hope to summon something or may be many things of real substance to counter this issue.

I hope this baby step will take me a step closer to me wanting to achieve what I revered as a young teenager, that to become a scientist of Nepal. Realizing that dream of becoming a scientist may take a few more years in coming but for now, I hope to achieve the feat of being a researcher, a promoter of ideation and a congregator of idea, people and the right platform of money and environment. Cheers to all! Cheers to ideas!