Influence of Different Economic Sectors on Gross Domestic Product (GDP) of Nepal

Abstract

This paper analyzed the effect of fluctuation of agricultural, industrial and service sector of economy on the GDP growth of Nepal. Secondary data used for this study was collected from the Central Bureau of Statistic of Nepal from year 2001/02 to year 2013/14. Multiple Regression Analysis and Pearson's Correlation Coefficients were used to analyze the data. The study identified the bottlenecks in GDP growth and suggests some procedures to eliminate them and some areas that can contribute more to GDP of Nepal were also suggested. Analysis shows service sector as major contributor to GDP of Nepal followed by agricultural and industrial sector respectively. The study also reveals slow shifting of economic sector from agriculture to industry and industrial to service which result in negligible growth in GDP even after a long time period. On the ground of labor involvement, agriculture is the largest economic sector serving 71% people, but contributing only 33.9% to GDP. The study also exhibits that GDP has a strong positive relationship with service and agriculture sector and negligible relationship with industrial sector. Even though, agricultural sector plays a vital role on the basis of people involvement, this study suggests economist to concentrate their attention on key areas of all economic sectors which can contribute more on GDP growth.