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Pradumna B. Rana and Binod Karmacharya

Nepal’s economic performance during the post-conflict period has been driven by remittances from the export of labor services and the improved performance of the agricultural sector, which is still very much weather dependent. The chapter makes the case for a connectivity-driven development strategy for the country. It argues that improved connectivity within Nepal and cross-border connectivity with its neighbors in South Asia, the Association of Southeast Asian Nations (ASEAN), and the People’s Republic of China (PRC) could be important ‘engines of growth’ for the country. Nepal has adopted a multi-track approach to promoting regional cooperation and integration in connectivity with its neighbors. However, a lot more needs to be done, especially in the context of the difficult political situation in the country, and donors have an important role to play in this regard. Ten priority projects to convert Nepal into a land-linked state are identified, but a detailed impact analysis of these projects is beyond the scope of this chapter.