Nordic Development Model and Nepal - Himal Post Himal Post
  • ३१ श्रावण २०७९, मंगलवार
  •      Tue Aug 16 2022

Nordic Development Model and Nepal

-Santosh Gautam

Sustainable promotion of quality of life of the general public should be the ultimate objective of political parties.  It can be possible if the leaders keep people at the center of politics and chalk out plans with strategic vision, mission and goals with respect to the changing socio political and ecological context of the world. Now the constitution has been promulgated through a richly inclusive and representative constituent assembly and is in the process of implementation. Unrest and agitation have affected the lives of Terai and the unannounced blockade by India has caused serious havoc in the lives of the Nepalese .  Strong political will power, vision and search for viable alternatives can contribute towards the long lasting solution to these problems.The issues of the state restructuring and institutionalization of constitutional provinces have been hard nuts to crack for the existing political parties. The myopic leaders of majority of the political parties are found to be basically guided by their egocentric interests. The nation or the people have not been the matters of top priority for them. The pitiable condition of our country despite being rich in natural resources and cultural heritages is, without shadow of doubt, because of incompetent and corrupt leaders.

For long lasting improvement in the quality of lives of the people according to their changing aspirations and to develop our self dependency we need to develop strong, sustainable and contextualized development plans.  At this sociopolitical juncture the analysis of some successful models of development in our context will be useful to pave our future path.

Nordic model is a developmental model incorporating a competitive capitalism and a smooth provision for the wellbeing of the general public. In other words it is an amalgamation of free market economy with a welfare state. Nordic model insists on the need of political stability for economic growth and it believes that political stability can be achieved through different social pacts and agreements but not through any sort of tyrannical or authoritative imposition of power. In Nepal too owing to the lack of political stability the pace of developmental activities has been slow. Hence political stability in the nation and different pacts and agreements in the societies are necessary in order to increase the pace of development in every nook and corner of the country.

According to the Nordic model the state shoulders not only regulatory responsibilities but also assumes developmental and entrepreneurial roles. Conventionally Nepal has been carrying out regulatory activities and has been formulating and implementing periodic and annual developmental plans and policies. However as the majority of the projects are donor driven and have been running under project based approaches Nepal has failed to achieve desired outcomes. Similarly despite having a lot more to do to keep pace with the socio economic and technological advancements in the world  there is very limited entrepreneurial intervention of the government that is necessary for strong productivity and higher well being of the people. Following are some features of Nordic Model and their implications in Nepal.

Social Capitalism

The welfare state envisaged by the Nordic model was based on reformist ideology focused on keeping the social order and stability intact. One of its important features is that it focuses on the need to persuade labor to sacrifice some of the gains in productivity in exchange for increased accumulation and greater employment provided that the increase of profit does not unjustly go to the capitalist only. There is the need to accelerate industrial development in Nepal but at the same time social order and stability are to be kept intact. It is necessary to ensure the access of all the people irrespective of caste, religion, ethnicity and class to employment opportunities and to reduce the increasing gulf between the rich and the poor.

Budgetary Intervention for Stabilization

Nordic model advocated the strong budgetary intervention of the government for the generation of optimum mass employment.  This sort of intervention can help to combat unemployment and to reduce increasing brain drain, the drain of labor force and different social evils in Nepal.

Intervention in the Credit Market

Nordic model talks about the provision of controlling the interest rates to create conducive environment for the establishment and growth of industries. Nepal too needs to maintain easy and low interest loan for the investment in industrial sector through suitable monetary and financial policies.

Supportive Environment towards Private Enterprises

Though the model has accepted the state as an important actor of national business it does not advocate large scale nationalization. Even under a socialist government Sweden was able to provide conducive environment for largest multinational enterprises of the world. In the present context of globalization as Nepal has been facing the lack of resources for investment it needs to create such environment. Security for foreign investment, strong legal provision to attract foreign and multinational entrepreneurs can support to revitalize the national economy of our country by generating mass employment and by increasing the per capita income of the country.


At present Nepal is undergoing a political transition and is in the process of establishing a stable political and governance system so as to speed up the process of development. At this it can be worthwhile to analyze various successful development models of the world and evaluate the possibility of using them in the geopolitical context of our country. Nordic Model has some more remarkable features like the provision of social insurance, social welfare and amicable and sustainable conflict management, balanced and credible role of the state, labor market intervention for higher productivity and mobility of the labor force and stopping labor drain, removal of domestic restrictions on trade, reforms of company law and banking legislations, harmonious relationship between the employer and the employed etc.

In spite of some dissatisfactions and conflicts promulgation of constitution can be regarded as a political success but if the political changes are not accompanied by the plans to bring about a sustainable change in the quality of lives of people through effective developmental plans and policies they can be lame. Among the most successful models of development of the world Nordic model is worth considering in the context of Nepal.

However an important thing to be taken into consideration is our peculiar socioeconomic realities. As no size fits all  instead of trying to adopt any successful models of development it is necessary to develop our own models of development learning lessons from different successful ones.