Urbanization, defined as the percentage of total population living in settlements designated as urban areas, generally was viewed as closely related to economic development. If the correlation between urbanization and economic development-- historically based on the experience of the industrialized nations- -is ÍÍÍÍaccepted, then Nepal has a long way to go before it becomes economically advanced. Nepal was one of the least urbanized countries in the world, with only 6.3 percent of its total population residing in urban areas in 1981. Yet it appears that the 1971-81 decade experienced a major spurt in urban population, increasing by approximately 108 percent, at an annual rate of more than 8.4 percent. The urbanization rate in the early 1990s was around 8 percent. Nevertheless, only twenty-three settlements were designated as urban areas, and only one of these settlements had a population above 100,000--the capital city of Kathmandu, which had a total population of slightly more than 235,000. Together with the other two major urban settlements--Patan (also called Lalitpur), which had about 79,800 people, and Bhadgaon (also called Bhaktapur), with about 48,500 people--the Kathmandu Valley in the Hill Region had the largest concentration of the total urban population--almost 40 percent.

In terms of the regional distribution of these urban settlements, the pattern was skewed in favor of the Tarai. Fourteen of the twenty-three settlements were found there, the majority located in eastern and central Tarai. The Mountain Region had no urban settlements. This situation clearly demonstrated that Nepal not only remained predominantly rural, but also that the existing urban areas were neither well developed nor well connected in terms of their geographical distribution. The only real urban network was found in the central section--the quadrangle consisting of Kathmandu, Pokhara, Butawal (and Siddhartha Nagar), and Hetauda.

Data as of September 1991