Today, Nepal is one of the most liberalized countries in the South Asian region. However, growth performance has been very poor in recent years, with sluggish exports and stagnating investment. In this context, a closer examination of the linkages between trade and investment is critically important from a policy point of view. There are highly liberal trade- and investment-related policies supplemented by important Acts. In the aftermath of liberalization that began in the early 1990s, both trade and investment increased substantially. However, that could not be sustained for long...