Afghanistan's Economic Profile
Economic Profile: Afghanistan
This profile was produced by the following group members:
Ethan Gordon – Team Leader: Af/Pak region
Key Words: Afghanistan, GDP, Human Development Index, Opium
Despite the obvious social turmoil in the country, having NATO forces in the region have seemed to be a boon for Afghani growth in the last seven years, as every year has seen steady growth so far since 2008. In 2009 Afghanistan actually had a 21% GDP growth, the largest in the world that year. Admittedly, Afghanistan’s incredibly poor economic situation during the Taliban regime left much room for growth, but Afghanistan’s economy continued to grow, hitting 14.4% in 2012.[1] What may be most important to outside investors would be how Afghanistan grows following the NATO pullout of the country, as the country is self-governed and must fight off the continuing presence of Taliban on their own. So far, the results may not be heartening, as 2013 saw only a growth of 1.9%, the smaller rate of growth since 2004.
While Afghanistan’s main reported exports are raw cotton, coal briquettes, grapes and scrap iron, which make up 45% of their total exports,[2] their largest true export is unfortunately opium, as the poppy product that is used to create narcotics such as heroin and morphine had a total farm gate value of $950 million in 2013, which is a staggering $883 million more than Afghanistan’s cotton production, its number one official export. Despite the United States’ large-scale investment in Opium eradication in the country, cultivation grew by 7% in 2013, and is strongest in Taliban run region.[3]
For any investor, the strong and unyielding trends of opium production dwarfing any legitimate export in Afghanistan would be a major red flag. If Afghanistan is to attract diverse and strong international investors, there would need to be a strong internal push to eradicate opium production, as current foreign efforts have largely failed.
As Afghanistan’s economy is largely based in agricultural and rural work, the unemployment rate in the country since 2008 has largely been stagnant, and is generally low, starting at 8.3% in 2008, plateauing at 8.7% in 2012, and dropping down to 8.0% the next year.[4]
In terms of Human Development Index, Afghanistan has made steady strides since 2008 and specifically since the NATO ousting of the Taliban, as in 2000 before the NATO occupation HDI value was at .236, then slowly increasing to .368 in 2010 and at .374 in 2012.[5] Despite the increasing value, which is due to constantly increasing life expectancy, expected years of schooling and GNI per capita, Afghanistan still is woefully underdeveloped in comparison to other South Asian and underdeveloped countries as a whole, being .184 points behind the average South Asian country, and almost a full .1 behind the average country that is considered “Low HDI”.[6]
What these numbers tell us is that Afghanistan has seen a spike in all levels of economic and social growth since the removal of the Taliban from power, and were largely unaffected by the 2008 economic downturn, largely due to their rural and agricultural economy. However, troubling trends of Opium production and the uncertainty that lies in a post NATO Afghanistan could spell the end of this positive growth, and how Afghanistan fares on its own in the next year could determine how viable it is as a prospect for foreign investment.
