The news coming out of Nepal in recent years has for the most part been grim. In addition to a gruesome massacre at the royal palace and battles between the army and Maoist insurgents, there are the usual floods and landslides that wreak havoc on the countryside during the annual monsoons, coupled with increasingly erratic weather patterns, droughts and fears about global warming. With the exception of the widespread jubilation that followed the protests last spring and King Gyanendra’s reinstatement of the parliament, the media give the impression that lately very little has been going well for the people of Nepal.

It may come as a surprise, then, that Nepal has a shot at being a Millennium Development Goals success story. Several indicators for these goals have seen dramatic improvements in the last decade. Between 1996 and 2004, the proportion of the population living on less than one dollar a day fell from roughly a third to a quarter. In the same period, the net enrolment rate for primary-school-age children increased from 69 to 84 per cent, and the ratio of girls to boys in primary school went from 0.66 to 0.86. The infant mortality rate dropped from 79 to 61 deaths per thousand births, and the maternal mortality rate has shown a similar reduction. While there has been little progress on the environment and a rise in the incidence of both HIV and tuberculosis, overall the country has made considerable progress toward achieving its MDG targets.

To what does Nepal owe this unexpected success? First, despite the nascent rebellion, Nepal’s economy performed relatively well in the late 1990s. Tourist arrivals reached record levels and there was steady growth in nearly all sectors. Overall economic conditions deteriorated only after the palace massacre of 2001 and the intensification of the conflict in the countryside. Second, some credit belongs to the Maoists. Not because their “People’s Liberation Army” and “People’s Governments” are freeing the poor and oppressed from the tyranny of capitalism, but because they made living conditions in rural areas so miserable that the Nepalese are giving up village life and moving to the cities en masse.

Poverty in Nepal is much more prevalent in rural than in urban areas, and rural social services are inferior. Around 95 per cent of the country’s poor live outside its cities. Urbanization is on the rise: between 1996 and 2004, the urban population doubled. As a result, the typical Nepalese generally has better access to social services like schools and health clinics than before. Thus, while few new health clinics were built between 1996 and 2004, the proportion of households within a half-hour walk of a clinic rose from 45 to 62 per cent. In addition, the number of Nepalese working abroad has increased substantially. A third of Nepali households are now receiving remittances from foreign workers and the recent annual growth in remittances has sometimes exceeded 30 per cent. These two factors – better access to social services in urban centres and increased income from urban and particularly foreign wages – explain the bulk of Nepal’s recent MDG gains.

Sadly, revolution as an instrument of development only goes so far. Economic growth since 2001 has been barely sufficient to keep pace with the growing population. More importantly, growth in the industrial and service sectors has stagnated as the threat of Maoist violence has driven away tourists and made it more difficult for industries to maintain production.

These sectors are vital if Nepal’s urban economy is to keep pace with its growing population. If Nepal is to have any hope of consolidating its development gains, it must resume the transition from an economy dominated by agriculture to one where industry and services play a major role. And for this, peace is a prerequisite. So the question is: Will the Maoists finish what they started? Will they work to establish the political and economic stability needed to move the country forward, perhaps a combination of Chinese capitalism and Indian democracy? Or will they merely make life in the city as intolerable as they have made it in the country? No one knows at the moment, but repeated threats made by the Maoist leadership for a new urban-based revolution are hardly encouraging.