In this article we explore the avenue to alleviate pervasive poverty in a small,
underdeveloped, and labour abundant dualistic economy. We take the case of
Nepal, analyze its income expenditure flows and compare its macroeconomic
structure with post-war Korean economy. We conclude that in the given
agrarian nature and land distribution pattern in Nepal, the existing flow
mechanism can hardly work in favour of the poor. Consequently, raising the
labour productivity is the effective strategy left to reduce poverty in Nepal. This
effort is urgent as the existing trend of sectoral labour productivities in Nepal
are discouraging, which is even far behind the post-war South Korean
performance.