THE NEPALI

According to the Global Innovation Index 2025, published by the World Intellectual Property Organisation (WIPO), Nepal ranks 107th out of 133 economies to make it one of the least innovative nations. It sits well below its neighbours India (39th), Bhutan (87th), and Sri Lanka (92nd), and keeps pace only with other lower middle-income countries at best. India, Vietnam, and the Philippines dominate Nepal’s income group in innovation.

That Nepal lags behind is no surprise in a country where politicians celebrate manual labour as public virtue. In Dharan, Mayor Harka Sampang has become a folk hero for wielding a pickaxe on camera, live-streaming his sweat to hundreds of thousands of followers. His admirers call him “a man of the people,” a symbol of purity uncorrupted by bureaucracy. But many mistake symbolism for strategy. A pickaxe may move a few cubic metres of soil, but it does nothing to shift a nation’s productivity frontier.

Government support for innovation – across federal, state, and local levels – is minimal, as the data makes clear.Public spending on research and development (R&D) is effectively zero. The country ranks 124th in business sophistication, 127th in human capital and research, and 110th in venture capital, with no recorded late-stage VC deals. Fewer than 3 per cent of women hold advanced degrees, and only 13 per cent of the workforce is engaged in knowledge-intensive sectors. No Nepali university ranks among global research leaders, and not a single major company invests in significant R&D.

Nepal’s “knowledge and technology outputs” score stands at just 13.2, which shows a vacuum of ideas and enterprise. The country produces virtually no patents, exports almost no high-tech goods or software, and registers zero unicorns, startups valued over $1 billion. Software spending accounts for 0 per cent of GDP, while high-tech exports make up 0.0 per cent of total trade, ranking the country 136th, dead last.

What compounds the problem then? The government ranks 7th globally in credit availability and 1st in microfinance loans as a share of GDP, a sign of a financial system built for survival, not for scale. Venture capital and startup financing are nearly absent. The result is an economy where small shops and remittance-fed consumption thrive, but firms that design chips, write code, or patent products cannot find air to breathe.

Even in areas of relative strength: high-tech imports (33rd) and low-carbon energy use (26th), Nepal remains a consumer, not a creator. Universities collaborate little with industry (rank 105th), and the state’s few research programs are fragmented and underfunded. Despite a large youth demographic dividend (47 per cent under 25), the education system ranks 126th, with some of the worst pupil–teacher ratios in Asia. The pipeline from classroom to laboratory to market is broken at every stage.

The consequences are predictable. Labour productivity growth, at just 1.1 per cent, places Nepal 56th globally, barely above stagnation. The World Bank estimates that, at its current rate, Nepal would need half a century to reach Malaysia’s present productivity level, even if it doubled its growth rate. 

Meanwhile, the world is moving fast. Nations that systematically invest in technology: Singapore, Sweden, South Korea, are reaping the dividends. Even Saudi Arabia and Qatar, once reliant on oil, are climbing innovation rankings through deliberate investment in research parks and technology ecosystems. Our neighbour India has developed four top-100 innovation clusters which include Bengaluru, Delhi, Mumbai, and Chennai, and we have, as you know, no internationally competitive innovation hub at all.

Ministries do issue five-year plans papers pledging to build a “Digital Nepal,” yet the data show: there have been no measurable R&D, no significant university–industry linkages, and no innovation policy with funding or targets.

But, Nepal has the ingredients for change, if it can utilize it. Domestic credit to the private sector, at 91.9% of GDP, ranks 26th globally, shows that liquidity exists. A modest reallocation of resources toward education, digital infrastructure, and research could yield exponential returns. What policymakers need to understand is that innovation is not about inventing the next iPhone; it is about creating the conditions that make invention possible. It includes various things but starting from reliable electricity, functioning universities, predictable laws, and the freedom to fail. These are definitely not beyond Nepal’s reach.