| Summary: | The principal theme of this study is an exploration of the route to alleviate poverty and promote equity in Nepal. On their own, neither the agricultural nor the infant/unorganised manufacturing sectors are able to generate the income and employment opportunities needed to meet the needs of the growing population. Given the modest scope to expand the amount of arable land available, any increase in food production to feed the growing population, will have to come through a substantial increase in farm productivity. Using data from the nationwide Nepal Living Standard Survey, undertaken in 2003, this study empirically investigates how redistributive land reform might improve agricultural productive efficiency, and explores how access to land might reduce poverty. It also examines how the non-agricultural sector. particularly manufacturing, can increase economic growth and reduce poverty. The study uses both parametric as well as nonparametric methodologies to measure technical efficiency and shows the link between land distribution and poverty. The key finding of the study is that land reform can only fulfil both efficiency and equity objectives with certain conditions. The study shows that an effective implementation of judicious land reform can increase productive efficiency, and access to land for the poor, together with other supportive complementary mechanisms, will increase household consumption and income and thereby alleviate poverty and inequality. However, given the current state of the availability of cultivable land for further distribution and the constraints of development, land reform cannot be the only intervention seeking to overcome existing problems of poverty and inequality. Land reform needs to be accompanied by other supportive rural development strategies, including strengthening the linkages between the urban and rural sectors.
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