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Key sector identification of Nepal: an integrated approach with linkage and hypothetical extraction method

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  • Lila Ballav Bhusal

    (Yokohama National University)

Abstract

This study presents the first comprehensive key sector analysis for Nepal, using an integrated approach of linkage analysis and hypothetical extraction method with the 2022 input–output table. The empirical analysis identifies three strategically crucial sectors. Agriculture emerges as the economy’s foundation, demonstrating the highest impact on both output and value-added generation, reflecting its fundamental role in employment and GDP contribution. Wholesale Trade exhibits balanced demand–supply effects through market integration, while Financial Intermediation shows strong supply-side influence through credit intermediation services. Moreover, Construction and the Electricity, Gas, and Water Supply sectors play vital supporting roles, enhancing infrastructure development and leveraging extensive hydropower resources to boost growth potential. The analysis reveals interesting disparities between output and income generation across sectors, particularly in the Food, Beverages, and Tobacco sector. These empirical findings align with and provide evidence-based support for recent government initiatives. While acknowledging methodological limitations regarding employment and environmental data, this research establishes an evidence-based framework for strategic sector prioritization and offers policy recommendations for sustainable economic development.

Suggested Citation

  • Lila Ballav Bhusal, 2025. "Key sector identification of Nepal: an integrated approach with linkage and hypothetical extraction method," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 14(1), pages 1-21, December.
    • Handle: RePEc:spr:jecstr:v:14:y:2025:i:1:d:10.1186_s40008-025-00346-5
    DOI: 10.1186/s40008-025-00346-5
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