An isolated, agrarian society until the mid-20th century, Nepal entered the modern era in 1951 without schools, hospitals, roads, telecommunications, electric power, industry, or civil service. The country has, however, made progress toward sustainable economic growth since the 1950s and is committed to a program of economic liberalization.

Nepal has used a series of five-year plans in an attempt to make progress in economic development. It completed its ninth economic development plan in 2002; its currency has been made convertible, and 17 state enterprises have been privatized. Foreign aid accounts for more than half of the development budget. Government priorities over the years have been the development of transportation and communication facilities, agriculture, and industry. Since 1975, improved government administration and rural development efforts have been emphasized.

Agriculture remains Nepal's principal economic activity, employing 80% of the population and providing 37% of GDP. Only about 20% of the total area is cultivable; another 33% is forested; most of the rest is mountainous. Rice and wheat are the main food crops. The lowland Terai region produces an agricultural surplus, part of which supplies the food-deficient hill areas.

Nepal (नेपाल) (ⁱ/nɛˈpɔːl/ ne-PAWLNepali: नेपाल [neˈpal] ( listen)), officially the Federal Democratic Republic of Nepal, is a landlocked sovereign state located in South Asia. It is located in the Himalayas and bordered to the north by the People's Republic of China, and to the south, east, and west by the Republic of India. Specifically, the Indian states of Uttarakhand, Uttar Pradesh, Bihar, West Bengal, and Sikkim border Nepal, while across the Himalayas lies the Tibetan Autonomous Region. With an area of 147,181 square kilometres (56,827 sq mi) and a population of approximately 27 million (and 2 million absentee workers living abroad), Nepal is the world's 93rd largest country by land mass and the 41st most populous country. Kathmandu is the nation's capital and the country's largest metropolis. Kathmandu Valley itself has estimated population of 5 million.

Nepal has a rich geography. The mountainous north has eight of the world's ten tallest mountains, including the highest point on Earth, Mount Everest, called Sagarmatha in Nepali. It contains more than 240 peaks over 20,000 ft (6,096 m) above sea level. The fertile and humid south is heavily urbanized.