Like other developing countries, Nepal began to receive foreign aid shortly after World War II. This was a time when the idea of development was becoming dominant, following US President Harry Truman's speech in 1947 about the West's obligation to develop the 'underdeveloped nations'. In Nepal, aid flows also followed the end of the autocratic Rana regime, which had been generally resistant to external ideas and resources. Worldwide, aid is not only a major political agenda but also an enormous industry: over the past 50 years, the amount of foreign aid disbursed totalled more than USD 2.3 trillion dollars. In Nepal, nearly half of the official budget still comes from foreign aid.
As such, there is today an increasing need for understanding how aid influences everyday social life, as countries throughout Southasia struggle to define standards and strategies for human development and societal transformation. While foreign aid is often believed to bring benefit to the recipient country, it is important to explore the subtle costs it can impose on an aid-receiving society – though more in political and cultural terms than economic. Taking the example of Nepal, one can unravel the reality of aid-induced hegemony.
In Nepal, the Rana regime depoliticised the country's people by creating networks of loyalties, and denying freedom of expression and political organisation. Aid has had similar effects but in different ways. Through more than a half-century of foreign aid, Nepalis increasingly came to see Eurocentric visions of development as superior, even the natural way to prosperity, thus undervaluing home-grown – and, importantly, self-propelling – political processes of change. In a country where both corporate and public investment has fallen massively, the aid economy has become the main destination for the educated workforce. Thus, thousands of educated Nepalis who could have become teachers, political leaders, social campaigners, activists or entrepreneurs have instead landed up in the Kathmandu-centric aid industry, accepting aid-dominated development ideologies and incentives.
The same is happening in the rural hinterland. As development projects have penetrated the villages, it is not uncommon to find a newly literate person looking for a job as a 'social mobiliser', 'local resource person' and so on – positions created by NGOs and development projects embodying the aid-sponsored ideology. This trend is particularly evident after 1990, when the development industry adopted a 'participatory approach'. Engagement in political parties or volunteer civic institutions is no longer a preferred option, and even party leaders increasingly indulge in development as consultants, heads of development NGOs, or recipients of aid money in different ways. Earning money in development has become far less arduous than running a business, and therefore being an entrepreneur is likewise not a preferred option. The private sector is not able to match the price of the development sector for its executives and has seen an exodus.