This essay explores the results of implementing a free enterprise in Afghanistan, from its modern origins within the Afghan Constitution of 2004 to the impacts of joining the planet Trade Organization in 2015. Without infrastructure, human capital, and industry, Afghanistan wasn't able to adopt a free enterprise, and its establishment resulted in urbanization, the decline of its traditional agriculture sector, and rising poverty rates. The “market access to goods and services” provision of the WTO agreement especially hurt domestic farmers. While the international development community has facilitated the transition to the free enterprise, it's also captured much of the investment and made the county hooked in to its support. In response to those consequences, Afghanistan should join regional trade agreements and be more critical of foreign economic intervention.
Keywords: International development, Afghanistan, market economy.
After the autumn of the Taliban in 2001, the North Atlantic Treaty Organization (NATO) forces led by the U. S. remained behind to help the governance transition process. With the assistance of the international community, Afghans experienced an interim administration, a transitional government, and eventually a presidential government. Supported by a far off military presence, Afghanistan opened its doors to international non-governmental organizations (NGOs) including the United Nations (U.N.), the planet Bank, and therefore the International fund (IMF). They aimed to determine institutions, infrastructure, and convey positive changes within the socio-economic status of the Afghan nation; however, Afghanistan wasn't ready for these changes, including the establishment of a free enterprise.
Afghanistan adopted a free enterprise after formally enshrining it within the Afghan Constitution of 2004. Article 10, Chapter 1 states: “The state shall encourage, protect also as make sure the safety of capital investment and personal enterprises in accordance with the provisions of the law and free enterprise.” Pressure by international organizations, including the planet Bank and IMF, including pressure from other bilateral donors remained crucial to the privatization and liberalization of the Afghan market. Moving forward, specific ministries and institutions like the Afghan Ministry of Economy, Ministry of Commerce and Industries, and therefore the Ministry of Finance worked closely with international experts and advisors in economic development and growth. In 2003, the international community helped to determine the Afghanistan Investment Supporting Agency (AISA). within the meantime, the Afghan Parliament passed the Chamber Law of 2009 which recognized the Afghanistan Chambers of Commerce and Industries as an independent and democratic organization that functions because the voice of the private sector within the country. The policies of the above ministries and institutions were tailor-made in favor of the free enterprise, but, in spite of these changes, Afghanistan’s economy remains unstable.
1. Market economy
The advent of a free enterprise in Afghanistan came too early and without the proper protections. While recent reconstruction efforts have helped, decades of war have destroyed Afghanistan’s infrastructure, forced residents to emigrate, and slowed the economy. The education system, while improving, doesn't guarantee good jobs for graduates. Similarly, Afghan industries are in need of further development. Without infrastructure, human capital, and industry, Afghanistan wasn't able to adopt a free enterprise. Yet, this choice was imposed on the country during a constitutional loya jigra (grand council) organized by the international community.
Wars have destroyed even the essential infrastructure that the Soviet Union left within the country like power plants, dams, highways, transportation, and a robust military. Many Afghans immigrated to Iran, Pakistan, Europe, the U. S., and other parts of the planet (Khan, 2012). When the Taliban came into power, they inherited no infrastructure, nor did they encourage the event of institutions and infrastructure. The Afghan economy of the Taliban era heavily relied on opium production and export, traditional agriculture, manual extraction of mines, and export of minerals to their close ally, Pakistan (Nijssen, 2010). For many years, Afghanistan had a standard economy which still remains in situ.
The Bonn Conference in 2001 was the primary step toward state- and institution-building (Fields & Ahmed, 2011). Afghanistan, with the support of international community, established a gender-sensitive and multi-ethnic interim government and drafted Afghanistan’s constitution. To enhance security, extend the authority of the Afghan central government, and to facilitate reconstruction, the international community (led by the U. S.) established Provincial Reconstruction Teams (PRTs) (McNerney, 2005). Additionally, basic infrastructure like building schools, hospitals, civil administration offices, and roads were reconstructed to trigger economic process.
2. Afghanistan’s membership in the WTO and it’s have an impact on the country’s monetary growth
World Trade Organization membership, in particular the clause calling for “market get entry to for items and services,” in addition hampered the outcomes of market liberalization during the 2000s. Before becoming a member of the WTO in 2015, multinational companies had get entry to markets in Afghanistan. In fact, they rushed to Afghanistan at the identical time as the intervention of the global protection forces. All of the logistics, construction, training, medical, and administration offerings of the navy have been reduced in size with non-public companies. Billions have been spent on providing the U. S. army in Afghanistan, and most of this ended up in the U. S. corporations’ accounts. For instance, a file via ACBAR, an alliance of global useful resource corporations working in the country, together with Oxfam, Christian Aid, Islamic Relief and Save the Children, estimated that forty percentage of the resource cash spent in Afghanistan has observed its way lower back to wealthy donor nations via company profits, consultants' salaries, and different costs, substantially inflating the value of tasks (Norton-Taylor, 2008).
Most of the worldwide useful resource for the reconstruction and rehabilitation of Afghanistan has been channeled via worldwide nonprofits, the U. N., and personal contractors. The Center for Public Integrity posted a listing of pinnacle contractors in Afghanistan and Iraq from 2004- 2006, which covered overseas organizations such as Tetra Tech, Chemonics International, and DynCorp International (Buzenberg, 2007).
International resource has been a splendid supply of earnings for worldwide contractors over the ultimate 17 years. For example, a worldwide team of workers in an American nonprofit is paid 22,000 USD month-to-month as a software officer with 6 months R&R (rest & relaxation), per diem, allowances, global trips, insurance, and many different benefits. A certified and skilled Afghan in the equal role receives 1,000–2,000 USD per month and need to work 12 months besides any different privileges (SIGAR, 2017). The Special Inspector General for Afghanistan Reconstruction’s (SIGAR) findings corroborate this declare and exhibit how global useful resource was once squandered over the remaining 17 years in contracts and development (SIGAR, 2018).
3. Moving forward and policy recommendations
As shown earlier, the market economy has deteriorated the domestic production sector of Afghanistan and created large unemployment and poverty rates. When Afghanistan joined the WTO in 2015, it accepted an even more advanced version of the market economy. The more Afghanistan joins such universal organizations, the more it loses control over its sovereignty; for any internal decision going forward, Afghanistan must make sure it is not in violation with other signed universal agreements. For instance, under WTO rules, international corporations can apply for any national project or RFP (request for proposals) announced by the Afghan government. Since the budget for such projects/ RFPs is paid by the international community, the Afghanistan government cannot prefer national corporations and suppliers over domestic ones. As a result, domestic companies either grow slowly or go bankrupt. Violations of any of these laws will have consequences, as Afghanistan relies on international aid and loans from the IMF and Asian Development Bank for its annual budget and trade deficit.
Conclusion
Since Afghanistan is already a WTO member, it should find a way to balance national priority programs with the WTO rules and regulations to support its domestic products, especially farmers and small businesses. Afghanistan can also identify and sign regional agreements with strategic allies specialized in certain sectors that benefit the country politically and economically. For instance, Afghanistan should join the Shanghai Cooperation Organization as Afghanistan did in signing the Central Asia Regional Economic Cooperation. Such regional cooperation can be advantageous, as the allies under the regional agreements can invest and contribute to key infrastructure. The government should also make sure that the domestic benefits of these agreements outweigh the disadvantages. In addition, under regional trade and cooperation agreements, the Afghanistan government should provide incentives for its strategic allies to invest in key infrastructures and Afghanistan national priority programs. Investment can take place in good governance, human capital (professional and vocational training), agriculture development, renewable energy, mining, and other key areas.
References:
- ADB, Asian Development Bank. 2017. “Share of population below national poverty line.” https://www.adb.org/countries/afghanistan/poverty.
- ADB, Asian Development Bank. 2019. “Asian Development Bank and Afghanistan: Fact Sheet.” https://www.adb.org/publications/afghanistan-fact-sheet.
- Afghanistan Times. 2019. “One million educated Afghans are unemployed.” January 11, http://www.afghanistantimes.af/one-million-educated-afghans-are-unemployed. AISA, Afghanistan Investment Supporting Agency. 2013. “Industrial Parks in Afghanistan: Growth, Challenges and Recommendation.” Directorate of Analysis and Evaluation.
- ATR Consulting, Kabul. 2018. “Aid Effectiveness in Afghanistan.” Relief Web, March. https://reliefweb.int/sites/reliefweb.int/files/resources/aid_effectiveness_in_afhganistan_march_2018_0.pdf.Buzenberg, Bill. 2007. “Top 100 Contractors in Iraq, Afghanistan.” The Center for Public Integrity, November 19, https://publicintegrity.org/national-security/top-100-contractors-in-iraq-afghanistan..
- Green, Matthew. 2012. “Wealthy Afghans Snapping Up Properties in Dubai.” New York Times, September 12, https://www.nytimes.com/2012/09/13/world/middleeast/wealthy-afghans-snapping-up-properties-in-dubai.html.
