The principal objectives of this thesis are to assess the value to Nepal of developing the use of mini-micro-hydro as a modern energy source in the rural areas and, at the same time, of promoting the domestic manufacture of mini-micro-hydro turbines and associated equipment as a means of creating a modern engineering sector within the country. Development of the mini-micro-hydro sector is viewed as a possible solution to two of the country's urgent economic problems. A sustainable and efficient means must be found of supplying the energy needs of areas remote from the national grid and, at the same time, it is important for the country to develop a nucleus of modern engineering capability in capital goods manufacture: the existence of a capital goods sector is widely understood to be a necessary condition of technological progress and a key to the achievement of on-going economic growth. This study investigates the potential of mini-micro-hydro development as a means of providing complementary solutions to these two problems. Mini-micro-hydro plants installed in the rural areas generate energy in an environmentally-friendly manner, but what, it may be asked, are the returns in commercial and in social terms on such installations? The manufacture of mini-micro-hydro equipment is already being undertaken in Nepal: does this activity offer the prospect of technology transfer and the development of enhanced technological capability? A third, subordinate, objective of the study is to determine whether, if a case is made for promoting the installation and manufacture of mini-micro-hydro units, the stance of the government, and of other institutions, is as helpful as it could be to achieving these ends. The conclusions of the study - from investigation of mini-micro-hydro operations in rural areas, and from examination of the technological capabilities developed by the turbine manufacturing firms - are that a positive case can indeed be made for encouraging in Nepal both the use of mini-micro-hydro units and their manufacture. It would however appear that certain changes in government policy and more active involvement by research institutions would be of assistance for the advancement of the mini-micro-hydro sector.