Hydropower, Electricity Exports, and the Promise of a New Growth Engine: An Early Empirical Assessment

Abstract

This study provides an early empirical assessment of hydropower development, electricity exports, and their potential role as a new growth engine for Nepal. Using time-series evidence, the paper examines the relationship between hydropower production, electricity trade, and economic growth through cointegration and Granger causality approaches. The findings suggest that electricity exports can contribute to growth when supported by adequate generation capacity, transmission infrastructure, regional market access, and stable policy arrangements. However, hydropower alone may not produce broad-based growth unless it is linked with industrial expansion, domestic consumption, investment, and employment creation. The study highlights the need for long-term energy planning, export diversification, and institutional coordination to transform hydropower potential into sustainable economic benefits.