Nepal has experienced persistent poverty throughout its recent history and it is likely to do so into the near future. Nepal’s per capita income of $700 in 2012, with a growth rate averaging just over 2 percent for the past two decades, contrasts with those of India and China—the two large and fast-emerging economies sandwiching this landlocked country. Nepal is one of the poorest countries in the world, with its gross domestic product (GDP) per capita ranked 21st-lowest out of the 179 countries included in the World Bank database. About one-third of the total population in Nepal lives on less than $14 of monthly income. These indicators are only reflective of the country’s long struggle to reduce poverty.

While Nepal has achieved some progress in reducing ...