Capitalism vs. Political Instability

If you think the financial crisis is throwing a wrench into your business plan, try running a distillery in Nepal. This article by Forbes tells the story of the Himalayan Distillery Group Ltd., or HDL, and their struggle to run a profitable business in the face of corruption, power outages, and kidnappings.

The Maoist government in Nepal does not make life easy for a capitalist business trying to expand its revenue base. Successful products introduced by HDL in the past have been closed down when they began to threaten existing industries. Poor infrastructure and “protection payments” to corrupt officials further chip away at the firm’s bottom line.

Yet despite these conditions, the country managed to rank 121/181 in the World Bank’s Ease of Doing Business Rankings, landing just one spot ahead of India. That’s certainly not a good ranking, but the fact that 60 other countries have even worse business conditions than Nepal came as a surprise to me. With such a significant proportion of countries facing challenges in their business environment, it seems that working to improve the basic structural needs of these countries would be more beneficial than focusing on their financial problems.