Nepal’s R&D funding: Not enough (My Republica March 19, 2014)

http://www.myrepublica.com/portal/index.php?action=news_details&news_id=71260

Nepal has now become one of the darkest countries in the world due to its remarkably long hours of power cuts and misplaced development priorities. Once a relatively self-dependent country in agricultural production and semi-finished goods like sugar, leather products and cement, Nepal has now been transformed into a nation deprived of almost all basic requirements of life including food, clothing, energy and technology. What should be the focus of our development planning and where should we spend the major chunk of our budget is a topic that is often debated in the media by our economists and development experts alike. There is always disagreement over which sector deserves our priority: energy, education, health, roads, agriculture or tourism infrastructure? But certain areas where comparatively smaller investments can generate really big returns are often neglected in such debates.
If we compare the relatively closed era of say 1950-1990 with the relatively forward-facing 2000-2013 period in the development trajectory of the country, there are a few significant differences. Compared to the first era, we now have a relatively better functioning democracy, which means more people centered decisions, less red tape and good governance. However, the troubles and toils of people have magnified. There are more jobless people now than ever before. For many, the work they do is not sufficient to sustain their livelihood. This is why around 1,500 people are departing the country on a daily basis. An equal number of people cross our open border by road every day. This high migration rate has drained the country labor force in the last few years. 

The population has increased from 18 million in the census of 1991 to 27 million in 2011. The added people need more food, more jobs and better human resource management. However, this population growth is considered normal and not unnatural like the baby-boom that occurred in the western world after Second World War. The three most populated countries in China, India and the US, all have managed their high population pressures rather well. They considered their people as opportunities for national development. China, the most populated country in the world, has also one of the cheapest labor forces in the world that in turn lure foreign investors, contributing to its already big FDI pool. 
However, China has also been training its human resources to better understand basic technology. Hence, it is not the 2.2 population growth rate that has slowed Nepal’s economic growth (to around 2 percent), nor is corruption solely responsible, or the failure of planners, or slackness of implementation agencies. All these might be responsible. But, above all, it is the absence of tech savvy among our planners and policymakers to better understand technology’s important role in the history of mankind that is hindering our development. 
If we study the rise and fall of development in the world, we find a strong correlation between scientific research and the development of a country. No country has developed without investing in Research and Development (R&D). History shows that all powerful countries of the past had big interest in R&D and funded it well. In 17th, 18th and early 19th century, the UK was a hub of scientific research. Most of the discoveries in physics, chemistry, mathematics, statistics, botany and zoology were made there. Large government funds were made available to academia for scientific research. There were Royal Societies for different branches of science (that exists until now). Many scientists were conferred national honors. They were called Sir (Sir Isaac Newton) and appointed in scientific academies. The famous Scottish mathematician and physicist William Thomson, well known as Lord Kelvin, was honored as a Lord, a member of the Upper House of the UK.
The government spent big on scientific innovations. This made the country the most powerful and influential for many centuries. But after the Second World War, the UK’s premier position has been replaced by another great power. From the early 19th century, the US gradually began to take over the mantle of the R&D hub of the world. Today, the US spends a big chunk of its budget on R&D. Other than funding from several private companies, US Federal R&D funding (which is only one major stream of the governmental support) in 2013 was US $138 billion. According to World Bank’s data, US government was spending around 2.8 percent of its GDP for R&D until 2009, which has been raised by the Obama administration to three percent. 
The increasing proportion of R&D spending relative to GDP shows more government inclination for scientific research. Also, and perhaps unsurprisingly, there is a strong correlation between this proportion and development of a country. According to World Bank in 2011, this spending was highest for Israel (4.39 percent) and lowest for some poor African countries like Madagascar (0.11 percent), Burundi (0.12 percent) and Gambia (0.13 percent). Many European countries spend between 2-3 percent of their national budget and the East Asian tiger South Korea spends 3.74 percent. Nepal has never given research and innovation high priority. No government, even after the first advent of democracy in 1950, has seriously thought about investing in research. According to a 2011 NAST report, the government that year allocated a budget of Rs. 443.611 million on R&D which is about 0.37 percent of GDP. Late professor Dayanand Bajracharya often urged the government to raise its research spending to at least 1.3 percent of GDP. 
On the verge of drafting a new constitution, the government should also give due attention to the development of science and technology. The technology related to mobile, internet and computer have revolutionized the way Nepalis live. Such adopted technologies have changed the lifestyles of even the rural folks. This hard fact must never be lost on our planners. I believe giving a little more attention to R&D will in the long run keep able brains in Nepal and in the process accelerate national development. 

The hydro route: My Republica : MARCH 2, 2014

After months of wrangling the new government has taken a near full shape. It is a pleasure that the government is led by a Gandhian democrat Sushil Koirala. The number of promising faces in the cabinet has given some hope to the people. Koirala government has two main responsibilities: promulgating the constitution within a year and at the same time taking measures to address the problems in various sectors. To meet the second objective, the government needs to work on several fronts and fill the vacuum created by past governments whose focus on constitution had pushed development issues to the backburner. Thus the current government needs to identify key priority areas and work on them. Many economists and development experts have recommended a plan-holiday, which seems advisable as the nature of this coalition government is transitory. But I would say the government should make energy its top priority. Nepal is one of the darkest countries in the world with long hours of power-cut. In winter there is more than 12 hours of daily power outage, which negatively impacts the country’s economy, education, livelihood and social harmony. Industries have been using imported fossil fuels for survival. Same is the story of other service sectors like hotels, national/international offices, hospitals and private colleges. Likewise, a number of households have been using inverters that store electric power in batteries. People are free to use such inverters if they can afford them. But such use results in 10 to 20 percent energy loss. Besides, it also creates inequality in the society—allowing only well-to-do to use these devices and letting the rest to grapple with darkness.  Unemployment has magnified in recent years. As past governments failed to address this problem, thousands of promising youth are leaving the country each day to find work. Unemployment cannot be solved solely by focusing on industrialization, education, technology and/or good governance. Developing enough energy is as crucial. Once the government launches energy projects in massive scales, it will create job opportunities for millions. In the long run it will help improve ever-increasing trade imbalance that is estimated to cross Rs 500 billion this year. Industries cannot be run without adequate energy, nor can health and education establishments. Due to the abundance of high altitude water sources, hydroelectricity is our most promising source of energy. Solar power, fossil fuel, biomass, and hydropower are also used to generate energy in Nepal. But two factors should determine which source to depend on primarily: cost and environment friendliness. But fossil fuel, coal or gas is neither cost friendly nor environment friendly. Hydroelectricity is the best option. But despite having abundance of rivers, we have not been able to utilize them fully. After more than 100 years of first hydroelectricity generation at Pharping in 1911, we have only been able to generate about 750 MW power so far, less than one percent of the estimated potential. Even today 60 percent of population have no access to electricity and depends on firewood or other means for illumination and cooking. The daily energy demand exceeds 1500 MW but we can generate only around 400 MW during the summer. Receding water level during the winter results in low generation. To solve this crisis, we need to develop reservoir systems instead of depending solely on run-of-the-river systems. Or we will always have energy crisis in winter and have to import it from India at a steep price. According to International Energy Agency (IEA), hydroelectricity accounts for only 16 percent of total energy in the world. China, Brazil, Canada and the US together generate 52 percent of total hydroelectricity. The top-ranked China produces about 700 terawatt (1 TW=10 million MW) hydroelectricity. Running large hydro-projects is costly. Thus private sector should be encouraged to invest. Citizen’s Investment Trust (CIT) and Nepal Telecom must be appreciated for investing in around 456 MW power projects so far. We need to encourage banks and financial institutions to join the fray. Nepal receives more than Rs 400 billion in yearly remittance. But the hard-earned money is used in purchasing luxury items, adding to our trade deficit. We need to channel remittance into hydro-development. Remittance we receive is sufficient for medium hydro-projects. Thus the new Finance Minister should devise policies to tap this resource. Remittance money is mostly deposited at cooperatives and financial institutions. Cooperative law should be amended to channel this deposit to development projects. The projects concerned should share profits and benefits with those whose money they use. Before the election, Nepali Congress and CPN-UML had promised to produce 500MW electricity in three years. They pledged in their election manifestoes to make the country load-shedding free in the next five years. But the bitter reality is that we have not been able to run mega power projects in recent years. Political parties themselves are responsible for nullifying mega projects like Arun-III, Pancheshwar, West Seti and Upper Karnali. The government needs to ensure that does not happen again. It needs to make energy production and promotion our first priority. This will be an important step in solving a myriad other problems facing the country.