Export Efficiency from the Perspective of Fiscal Policy in Nepal

The major objective of this chapter is to investigate the determinants of export efficiency, focusing on the role of fiscal policy variables. In the context, it is important to note that Nepal’s export performance has not met the expectations of policymakers and other stakeholders, despite various policy attempts. Also, the nexus between fiscal policy and exports has not been systematically investigated in the Nepalese context yet. For this purpose, the Standard International Trade Classification (SITC) revision III mirror exports data of Nepal are used for the period from 1988 to 2023 in an unbalanced panel structure. Then, the stochastic frontier analysis (SFA) version of the gravity modeling approach is employed. The major finding from this analysis is that the fiscal policy does not directly affect a country’s export efficiency unless it is tied to a better quality of governance.