Analysis of the Economic Impact of Improved Connectivity in Nepal

Abstract

This study has estimated the economic impacts of ongoing and future infrastructure development projects in Nepal by using the geographical simulation model developed by the Institute of Developing Economies (IDE-GSM). The IDE-GSM is a computational general equilibrium model based on spatial economics. The simulation analysis reveals that ongoing infrastructure development projects in Nepal benefit the country’s economy and that the planned connectivity improvement with India will have a positive impact, with an anticipated major shift in the mode of transport for trade. JEL Classification: C68, F17