-Dr. Alok K. Bohara
The newly opened parliamentary session offered a revealing snapshot of Nepal’s current moment. There were gestures of significance—the elevation of a non-Khas-Arya Nepali to a position of power through popular choice, and a formal acknowledgment of historical injustice toward Dalit communities. These are important signals. They speak to a deepening of inclusion and a willingness to confront the past.
Much of the discussion that followed turned to plans and policies—how to ease the lives of migrant workers, how to mobilize diaspora investment, how to curb corruption, and how to respond to emerging global uncertainties. These are necessary conversations.
Yet something important was missing.
While we continue to improve the systems that support outward migration and external inflows, there has been far less attention to a more fundamental question: how do we build an economy that can retain its people? We cannot keep sending our human capital to build other nations while expecting a vibrant and resilient economy at home. In fact, this is likely to breed perverse incentives, as some research has indicated—what I refer to as its unintended consequences.
In any case, this essay builds on an earlier note on Nepal’s Fourth Century, which outlined the “what, how, and where.” It turns to a related question—one that may deserve greater attention in the days ahead: why the system must change, and why the shift from a remittance economy to a retention economy is central to that transition.
There is, of course, a degree of caution as well. The pace of recent actions has been swift, and moments of rapid change often benefit from continued reflection and communication. As decisions move forward, it may be equally important to ensure that the public understands the thinking behind them—so that clarity comes from leadership rather than from competing narratives. In that spirit, a brief weekly address from the Prime Minister directly to citizens could be beneficial.
Still, there is a sense that something new is in the air. The early signals from Nepal’s new government—from its 100-point reform agenda to a series of swift administrative moves—reflect energy, urgency, and a willingness to act. Long-stalled issues are being revisited, processes are being streamlined, and the system appears to be moving with a speed not seen in some time.
Moments like this—of hope and caution, of excitement and trepidation—are filling the air. It brings to mind a song by Bob Dylan.
“Blowin’ in the Wind” became an anthem of the 1960s civil rights movement. It did not introduce new ideas. It gave voice to what people were already sensing—signals that were present, circulating, and waiting to be acknowledged.
Change, when it comes, often feels sudden. Nervousness is natural, but hope and expectations also linger for some time—often referred to as the honeymoon period for a new government.
Nepal today carries such a moment.
For decades, the “signals” have been in the air. Seven constitutions in seven decades. Governments rising and falling in rapid succession. Nearly 30 prime ministers in as many years—often in a revolving-door, musical-chair fashion. At the same time, families making plans around migration, villages slowly emptying, and young people preparing to leave rather than to build. These are not separate events. They are connected expressions of a system that has struggled to hold together.
That system is often described as a remittance economy.
But this is more than a label. It is a structure—with unintended consequences.
A System Built on Outflow
Over time, Nepal has built an economy that is very effective at sending people out and bringing money back. Much less attention has gone into building an economy that can absorb those same people at home. One of the country’s most valuable resources—its human capital—has increasingly been directed outward.
This has had consequences.
The Unintended Consequences
As labor and talent move abroad, domestic sectors are left thinner. Agriculture struggles to modernize. Industry remains shallow. Local enterprise finds it harder to grow. In economic terms, this has some resemblance to what economists call Dutch Disease, where one dominant inflow weakens other sectors.
But the deeper issue goes beyond sectoral imbalance.
It is closer to what has been described in political economy as the “resource curse” or the “paradox of plenty” (Terry Lynn Karl; Michael Ross). When economies depend heavily on a single external source of income, they often diversify less, institutions weaken, and systems begin to organize around control and distribution rather than production. A perverse incentive begins to emerge, where elites start competing for access to these remittance deposits.
Granted, Nepal is not an oil economy. But remittance, as a dominant external inflow, creates similar pressures.
When a large share of national income comes from outside, the internal system begins to reorganize itself—not around production, but around managing and accessing those inflows. Over time, this is reinforced by a political economy that has, often unintentionally, facilitated the large-scale exodus of able-bodied manpower. What begins as a coping strategy gradually creates perverse incentives at home: it becomes easier to sustain consumption through external earnings than to build productive capacity domestically. It also becomes easier to issue policy and programmatic prescriptions for quick results than to do the hard work of building an industrial base.
From Production to Flow Management
In effect, value is generated outside, while the system inside organizes itself around its distribution, circulation, and control. In a quiet way, this begins to resemble a wealth-pump economy—where effort and capabilities are exported from the country, and the imported “income” circulates upward through consumption, real estate, and elite lifestyles rather than broad-based production.
This is where an extraction–control nexus takes shape. Value is created outside. Control (of institution and polity) is exercised inside to capture the imported income.
Banks orient toward remittance flows and consumption. Training centers for language and overseas skills expand across cities and towns. Service industries grow around preparing people to leave. Political actors extend their reach outward—organizing diaspora networks, building party presence abroad, and maintaining ties that connect to these external flows.
None of this is necessarily by design.
But these are the unintended consequences of the system we have built.
Over time, this changes incentives.
It becomes easier to compete for access than to create value domestically. Networks begin to matter more than productivity. Gradually, the system fills up with actors whose role is to manage, distribute, and control flows rather than to produce. The culture of bichaulia and commission-based networks expands throughout the system, with the polity political actors often taking the lead.
When Elites Multiply and Production Shrinks
This is where we begin to see elite overproduction—a concept where the number of aspirants to elite positions grows faster than the number of productive opportunities available.
Today, Nepal has roughly 36,000 political office holders, while the base of entrepreneurs and productive enterprises remains relatively thin. The imbalance is not just numerical—it reflects how opportunity is structured.
Implications for Democracy and Development
The implications go beyond economics.
In systems where income depends less on domestic production and more on external inflows, the link between citizens, work, and governance weakens. Accountability softens. Patronage strengthens. The system leans toward distribution over performance.
Over time, this makes it harder for a healthy, participatory democracy to deepen and sustain itself.
Many of these effects have been in the air for years.
What we are seeing today—the political churn, the public frustration, the search for new leadership—can be understood as the result of these accumulated pressures finally surfacing.
That is why this moment matters —hope and energy.
The Shift: From Remittance to Retention
The question is not whether remittance is good or bad. The question is whether it should remain at the center of Nepal’s economic model. What is needed now is a shift: From a remittance economy to a retention economy.
A retention economy asks a simpler question:
How do we create enough opportunity at home so that people have a real choice to stay?
This means building domestic absorption capacity—an economy that can productively use its own people, skills, and resources.
In practical terms, this requires reconnecting what Nepal already has. Agriculture, culture and tourism, and energy need to work together, not separately. The Higher Education sector needs to link with local opportunity, so that skills match real economic activity. And policies need to support those who want to build, produce, and invest within the country.
None of these ideas are new. What has been missing is alignment and follow-through—or a Fourth Century vision.
The new leadership now has a narrow but important window. The task is not just to move faster, but to move differently—to shift the system away from extraction and toward production.
Toward an economy that does not mainly send its people out, but one that gives them a reason to stay—and build.
In a quiet way, the system we have built on exporting manpower has become a victim of its own success. That success comes with a risk.
That is, this dependence creates an additional layer of vulnerability. When a large share of national income is tied to external labor markets, shocks beyond Nepal’s control—geopolitical tensions, economic slowdowns in host countries, or sudden policy shifts—can quickly ripple back home. The recent uncertainties in the Middle East are a reminder of how exposed such a system can be. What appears as a steady inflow can, in moments of disruption, reveal itself as a fragile lifeline.
The bottom line is that we cannot build a strong and resilient economy by exporting our people. At some point, we have to start keeping them—and building here.
Dr. Alok K. Bohara, Emeritus Professor of Economics at the University of New Mexico, writes as an independent observer of Nepal’s democratic evolution through the lens of complexity and emergence science. His systems-policy essays on Nepal’s socio-economic and political landscape appear on Nepal Unplugged.
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