Interplay Between Conflict, Poverty And Remittance: The Case Of Nepal

Abstract

 In 1996, the Maoist launched the "Peoples War" in Nepal claiming that the constitution of Nepal was inadequate in ensuring freedom, justice and welfare for the Nepalese people. The insurgency spread throughout the country and in a period of 10 years, about 13 thousand people lost their lives. In 2005, the Maoists declared a cease-fire and entered a peace agreement with other political parties, ending the decade long war and putting forth a united opposition against the monarchy. In April 2006, King Gyanendra, the ruling monarch of Nepal ceded absolute power, bringing to an end the long standing monarchy in the country. Nepal is one of the poorest countries in the world with substantial variation within the country with respect to economic development and conflict intensity. In this paper, we will provide evidence of regional diversity and examine a possible relationship between the level of development and conflict intensity across regions. In the midst of the conflict, poverty rate in Nepal dropped by about 10%. We will look at remittances as a possible explanation of this phenomenon.