Structural Transformation and its Impact on Economic Performance in Nepal

Abstract

The GDP of nation is contributed by three sectors (primary, secondary and service). The transformation of economy from one sector to another is called structural transformation. Structural Transformation has usually positive impact on economic growth of Nepal. This research aims to answer the questions about what are the effects of structural Transformation on growth in Nepalese economy. Economic performance is measured by Per Capita Income. This study tries to find out which sectors a government should make better strategies to uplift and which sector to give less priority based on its contribution on economic growth. Time series data from 1975 AD to 2020 AD have been taken. Auto Regressive Distributed Lag (ARDL) Model is used as econometric tool to analyze the data. The expected result is that there is a long run association between per capita GDP and sector wise GDP. Also there is a significant relationship in structural transformation and economic growth in Nepal. So government should give more concern to develop service sector followed by primary sector and secondary sector.