Handmade paper in Nepal: lessons in institutional innovation

Studies of how innovations start and spread usually focus on the technology itself, rather than the complex interactions between people involved in processes of change. The growing handmade paper industry in Nepal, however, highlights the importance of institutional innovation.  A wide range of socially responsible institutions have spread in the industry which appear to be sustainable from an economic, natural resources and institutional perspective.

An article in the journal World Development, examines the rapidlygrowing handmade paper industry of Nepal.It looks at the social relations between the different people involved and thesustainability of the industry. Nepal’shandmade paper industry, largely based on the fibers of the Loktashrub, survived a period of decline in the twentieth century, but began torecover with the growth of the tourism industry and export trade in the 1970s.

In 1980, it was further boosted by community development through theProduction of Handmade Paper Project (CDHP) under a Small Farmer Development Programme (SFDP). The project aimed to revive thetraditions of paper-making while contributing to community development through income-generatingopportunities and other activities in rural areas. Today, there are 600 paperindustries in Nepal, 175 of which manufacture about 30,000 tons of paper products annually.From 1998 to 2004, the industry expanded by 22 percent a year.

The authors find that the growth of the industry depends on thefollowing characteristics:

• Localsocial entrepreneurs have taken advantage of international consumer interest inNepali handmade paper products, much of which is sold with a fair trade and environmentallabel.
• Governmentpolicy has supported the industry through trade regulations, developmentprojects and an emphasis on community forestry.
• Sociallyresponsible organisations following several fair trade codes (many under theumbrella of a local business service organisation: the Nepal Handmade PaperAssociation) have continued traditional commitments to fair working conditionsand community development.
• Institutionalinnovations that have developed are relevant to social, cultural and political conditionsin Nepal: diverse groups areinvolved including forest user groups, a business service organisation, (which lobbiesgovernment to monitor forest stocks and following regulations) and government departments(banning chemical dyes and implementing labour laws, for example).
• Althoughthe UNICEF/SFDP project helped to revive the industry in early 1980s, Nepalisocial entrepreneurs are the main people who promoted their products through localand international networking, and by developing a diverse range of sociallyresponsible practices such as better working conditions and community developmentactivities, in Nepal.

Some problems in theindustry exist, such as localised over-harvesting of lokta,shortages of lokta due to inaccessibility during the conflictbetween the Maoists and government forces, and a need to continuously find anddevelop international markets. However, on the whole, people involved recognisethese issues and are trying to address them.

The authors believe theexperience of the handmade paper industry in Nepal can provide lessons fordevelopment practice:

• focuson the positive: the growth of the industry shows that despite the widespreaduse of child labour, lack of health and education facilities elsewhere in Nepal’s industries, someNepali social entrepreneurs have shown that it is possible to developsustainable initiatives that help disadvantaged people
• supportlocal and international groups and people in creating socially responsibleinstitutional innovations relevant to the specific conditions of otherindustries
• recognise the importance of a personal commitmentto human rights and social justice by some different people in the industry, thegovernment and in trading organisations.