The objective of this paper is to explore variables influencing GDP of Nepal with a linear regression equation, using the Ordinary Least Squares (OLS) estimator. Understanding the relation between GDP(Nepal), GDP(India), Education index(Nepal) and level of their dependencies.
1950s Indo-Nepal Trade Treaty gave Nepal a full and unrestricted right to commercial transit of all the goods and manufacturers through the territory and ports of India.
India’s Exports to Nepal was 5.85 Billion dollors during 2019-2020, says United Nations COMTRADE database on international trade. That is 60 % of total import Nepal made in that year. On the other hand, World Bank estimates $9.2 billion worth of export potential in Nepal. Out of which Nepal only managed to export less then 10%. around 60% of total export is made to India. Therefore, I believe the tendency of overall economy of these two nations is directly dependent to each other’s GDP. Apart from these two variables I consider educational attainment to be a prominent factor that influence the GDP.
Robert J. Barro mentioned education, health, and aspects of social capital to be the major determinant of economic growth in his famous publication “Education as a Determinant of Economic Growth” Therefore, multiple regression analysis is performed with the above-mentioned variables. Main focus was on Nepali GDP as a function of educational attainment and the way it fluctuates over time.
Source of Data was the official web service provided and maintained by international monetary fund itself. It was a simple excel data which was further cleaned and verified form other sources like World Bank, UN COMTRADE. To get the best possible analysis, data form past 32 years, (1990 to 2021) are used.
Dependent Variable: (Y) GDP of Nepal.
Explanatory variables: (X1) Educational attainment in Nepal & (X2) GDP of India.
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