Nepal is in the process of forming a federal state, where the borders of the provinces is one essential, but disputed, issue. The book discusses underlying economic and social conditions that should be taken into account when the provinces are formed. It is described how the average province poverty levels, and related economic and social indicators, will depend on the federal map. The general finding is straight forward, if there is variation in poverty between districts in a specific area, then a large province that includes both poor and rich districts will have the average poverty level of those districts. As a result models with a large number of provinces will tend to imply a more unequal distribution of poverty between provinces than models with few provinces. In particular one may end up with a very poor Karnali province if the western hills becomes one separate province.
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