Nepal has a medium type of economy.Agriculture is the main accoupation of Nepalese people. About 90% of the population is engaged in agriculture, and there are very little industries. The Terai region occupies 23% of the land area and contains 42% of the population, is the most productive region. It accounts for over 80% of Nepal’s rice, and 65% of its wheat. Cash crops like sugar cane, jute, tobacco and tea also important. The Hill region occupies 43% of the area and contains 50% of the population. The fertile Kathmandu Valley contains 10% of the hill population and is the center of government. The mountain region occupies 34% of area, but only 8% of its people. This region is inhabited by the pastoral nomads. Most hill and mountain farm households own livestock whose main contribution to human existence is through their provision of manure and draught labor. A small surplus of grain and industrial products are exported to India. Carpet, jute, brick, sugar, cigarette, saw mill, rice mill, oil mill, beer and garments are the major industries. Tourism is one of the biggest foreign exchange earners. There is nothing much to talk about when it comes to Nepalese economy. The data doesn’t paint a rosy picture at all. In fact the picture looks grim. Nepal is among the poorest and least developed countries in the world. In fact Nepal doesn’t stand anywhere to its otherwise developing neighbors such as India, Pakistan and Bangladesh. Thanks to the Sub-Sahara African countries, it is not considered the poorest economy now. Nevertheless, with almost 45% of its population living below the poverty line, Nepal has to do much catching before being termed a Developing Economy.
Agriculture is the mainstay of the economy, providing a livelihood for three-fourths of the population and accounting for 38% of GDP. Most of the agriculture activities take place in the Tarai region. The sub-standard equipments and pesticides along with the medieval mode of agriculture make it a tough affair. The industrial sector is in a dismal condition. Industrial activity mainly involves the processing of agricultural products including jute, sugarcane, tobacco, and grain. These things are hardly considered industrial activities by New-school economists.Due to its long stint with monarchy and feudalism, Nepal has one of the most uneven distributions of resources and wealth in the Asia. This has led to the birth of counter initiative movements such as Maoism. Security concerns relating to the Maoist conflict and counter insurgency initiatives have led to a decrease in tourism, a key source of foreign exchange. Nepal has considerable scope for exploiting its potential in hydropower and tourism. These are considered the up coming hot cakes in New-wave economy. Prospects for foreign trade or investment in other sectors will remain poor, however. There are lots of reasons for this such as the small size of the economy, technological backwardness, landlocked geographic location, civil strife and its susceptibility to natural disaster.