Trade Liberalization in Nepal: Analysis of Its Impact

Abstract

The objective of this study is to examine the impact of trade liberalization on Nepalese economy over the period 1990-2018. As per studies, trade liberalization increases the areas and size of foreign trade.  Nepal has introduced the economic and trade liberalization policy in mid-1980s and started to liberalize its trade and investment after 1990s. After the adoption of economic liberalization, the flow of foreign trade, economic growth of Nepal has been significantly increasing. The impact of trade liberalization on economy is measured in terms of economic growth, trade tax, industrial GDP and ratio of trade tax to total size of trade of Nepal by applying simple and multiple regression models. In Simple regression model, four equations show a positive correlation between INGDP and import, export, total trade, EOI inflation rate.