Political instability, once perceived as distant geopolitical threats, has become a disruptive force shaping everyday realities, rising prices, fluctuating job prospects, and uncertain entrepreneurial environments. In 2025, with an increasingly fragmented global order, the nexus between geopolitics and economics is undeniable. Decisions made in Washington, Brussels, or Beijing may seem remote, but their repercussions ripple into nations like Nepal, influencing consumer prices, employment patterns, and business viability.
For decades, globalization facilitated the liberal movement of goods, capital, and services. However, recent disruptions such as trade wars, sanctions, and cross-border investment restrictions have undermined that stability. For instance, the 2025 tariff escalation between the United States and China destabilized international supply chains, forcing companies to either absorb higher logistics costs or pass them onto consumers. These global shifts are reflected locally higher import prices and delayed access to essential technologies impact Nepalese households and businesses alike.
The broader macroeconomic impact is staggering. Political and Economic volatility has already eroded over $320bn in global corporate profits. The World Bank (2024) projects that continued geopolitical instability could reduce global GDP by two percent over five years equating to over $2trn. Corporations, facing earnings declines, are responding by freezing hiring, withdrawing from emerging markets, and redesigning business models to hedge against policy unpredictability.
This creates a hostile environment for job seekers and entrepreneurs in countries like Nepal. Risk-averse global investors hesitate to fund startups in politically fragile environments. According to McKinsey & Company (2025), 80 percent of global supply chain leaders have begun regionalizing operations to mitigate geopolitical risk, a trend that could bypass Nepal unless it strengthens domestic infrastructure and governance.
Furthermore, evolving legal and regulatory frameworks present additional challenges. Countries are instituting laws that restrict foreign ownership or control of strategic technologies, complicating cross-border business operations. As one global legal expert remarked, “Geopolitics is the new GDPR (General Data Protection Regulation.),” referencing the complexity of navigating geopolitical compliance as per the news media. For Nepalese youth seeking global opportunities, this means more bureaucratic red tape and fewer international openings.
Nepal, though geographically distant from global epicenters, remains vulnerable to these external shocks. Domestically, persistent political instability exacerbates the situation. Since its democratic transition in 2008, Nepal has witnessed 14 different governments, averaging one administration every 14 months. This political churn stymies policy continuity and deters investor confidence (CESIF, 2025). At the 2025 Kantipur Economic Summit, local business leaders cited high taxes, bureaucratic inertia, and inconsistent regulatory enforcement as key barriers to growth. Foreign direct investment (FDI) pledges for 2024 stood at Rs 56bn, yet only 35 percent of that materialized into actual capital inflows.
Migration trends further underscore Nepal’s economic fragility. The outflow of youth has intensified, with over 700,000 Nepalis departing for employment abroad in FY 2023/24 alone (Department of Foreign Employment, 2024). While remittances stabilize household consumption, they signify a loss of human capital crucial for national development. Youth unemployment remains alarmingly high at 19.2 percent (International Labour Organization, 2023), fueling this exodus.
Infrastructure bottlenecks further hinder growth. Flagship projects like the Nijgadh International Airport remain stalled due to environmental and bureaucratic disputes. Nepal’s poor ranking 111th out of 132 countries in the 2024 Global Innovation Index (WIPO, 2024) illustrates the policy and infrastructural deficits throttling innovation. Despite its growing tech-savvy population, Nepal lacks the ecosystem to support digital entrepreneurship or attract global investors.
Corruption, opaque regulations, and arbitrary enforcement discourage local enterprise. As per the Transparency International 2024 Nepal ranks in 107th position out of 180 countries in its Corruption Perceptions Index. Startups often encounter unpredictable tax regimes and cumbersome approval processes. As one young entrepreneur in Lalitpur recounted, “Investors liked my idea but warned me that Nepal’s political climate is too risky. One even suggested relocating to Bangalore.”
The consequences are visible in everyday life: fewer businesses mean fewer jobs; declining investment translates to limited services and slower income growth.
Yet, amid these challenges, Nepal holds transformative potential. With one of the youngest demographics in South Asia, abundant hydropower reserves, and proximity to India and China, Nepal could become a regional hub for clean energy, digital trade, and ecotourism. The missing link is political coherence and policy continuity.
For MBA students and young professionals, understanding this interplay is critical. Advocacy, informed participation, and institutional engagement are essential. By supporting transparency, economic reform, and democratic accountability, Nepal’s youth can shape a more resilient future. Businesses too must adapt developing agile strategies, risk mitigation mechanisms, and local market depth to survive in this volatile environment.
Global instability is not an abstract concept. It affects your startup potential, your career trajectory, and your nation’s competitiveness. The question is not whether Nepal will be impacted but how it will respond.
Anupama Paudel
Anisha Shakya
MBA (Global Business)
SAIM College