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    Economic Growth

During Past One Decade in Afghanistan


Afghanistan’s economy is recovering from decades of conflict. The economy has improved significantly since the fall of the Taliban regime in 2001 largely because of the infusion of international assistance, the recovery of the agricultural sector, and service sector growth. Despite the progress of the past few years, Afghanistan is extremely poor, landlocked, and highly dependent on foreign aid, agriculture, and trade with neighboring countries. Much of the population continues to suffer from shortages of housing, clean water, electricity, medical care, and jobs. Criminality, insecurity, weak governance, and the Afghan Government’s inability to extend rule of law to all parts of the country pose challenges to future economic growth. Afghanistan’s living standards are among the lowest in the world. While the international community remains committed to Afghanistan’s development, pledging over $67 billion at four donors’ conferences since 2002, the Government of Afghanistan will need to overcome a number of challenges, including low revenue collection, anemic job creation, and high levels of corruption, weak government capacity, and poor public infrastructure.

Afghanistan’s Recent Economic Performance:

Afghanistan’s economy saw record real GDP growth in 2009/10 at 22.5 percent. Since 2002/03 the country has seen average growth rates in the double digits, but with great volatility because of its heavy reliance on agriculture, which is subject to weather fluctuations. Even with an uncertain and deteriorating security situation, strong output was driven by increased donor spending – a 24 percent increase in core budget donor grants and about US$ 4 billion in off-budget donor funding – and recovery from the severe drought of 2008/09. Last year’s harvest led to agriculture output growth of 36 percent (constant 2002/03 prices) and the non-agricultural component of 14 percent.

Private consumption has been the primary driver of economic growth over the past half-decade. Behind consumption growth, is the security economy that generates demand for goods and services, equipment and operations and maintenance of the national army, as well as higher spending by donors, and their large off-budget contributions. In 2009/10, private consumption contributed 22.1 percent points of the 22.5 percent real growth (while net exports represented –5.7 percentage points). Consequently, government spending contributed relatively little to GDP – just 3 percentage points. Furthermore, investment has been dynamic, showing moderate growth over the years and contributing around 4 percentage points to GDP growth, mostly from the external budget capital spending and private investment in the security economy.

Much of private consumption is directed towards services. In 2009/10 and in the past five years, services contributed about half of output (and over 10 percentage points of the 22.5 percent real growth – Figure B). The most dynamic services subsectors have been Communications (45 percent annual growth), Finance & Insurance (27 percent) and Transport (22 percent), with Wholesale and Retail trade lagging at a marginal 4 percent growth. In addition, Agriculture contributed 7.3 percentage points, driven mainly by a good cereal harvest and livestock. The sector’s output has been volatile because Afghanistan’s arable land and most irrigation systems depend on seasonal rain and snow. Furthermore, Industry contracted by 3 percent over last year, due largely to weaker manufacturing, that contracted by 12 percent. In addition, Construction contributed 1.86 percentage points, while mining added only a marginal at 0.11 percent of last year’s GDP growth.However there are a number of economic indicators suggesting that Afghanistan is on an unsustainable growth path. The country is highly aid dependent with foreign aid disbursements of 47 percent of GDP in 2008/09. Only little is produced for export purposes while the country depends heavily on imports for reconstruction and food. The same financial year, private investment only reached 8 percent of GDP, while total investment was 32 percent of GDP. Another major concern is the fact that gross revenues from opium trade are estimated to be equivalent to as much as third of measured GDP (opium is not reflected in the official GDP numbers). Afghanistan is the source of 93 percent of the world’s opium production and the area under cultivation more than doubled from 2003 to 2007. This context implies the need for a medium term strategy based on alternative sources of sustained growth in Afghanistan.

Great hope is being placed on the development of the mining sector. At present, the mining sector’s contribution to GDP is marginal, at less than 0.3 percent. Two decades of war, chronic neglect, and severe under-funding have limited the development of this sector. But two recent large scale investments at Aynak and Hajigak could mark a fundamental shift. It is estimated that Afghanistan has substantial, untapped mineral deposits which have the potential to make it to a major exporter of minerals. While there are many uncertainties about the actual benefits that would accrue to the country from mining, there is little doubt that the sector, if managed well, could be the main driver of growth in the years to come. However, the development of the mineral sector risks of further burdening the country’s fragile governance. Moreover, mining is pre-dominantly a capital-intensive activity which will only generate a limited number of jobs. Unless linkages to other economic sectors are strengthened, mining development is unlikely to bring relief to the poor and vulnerable population in Afghanistan.

GDP (purchasing power parity):                                                   GDP – per capita (PPP):

$27.36 billion (2010est.)   $900(2010est.)
$25.28 billion (2009est.)  $900(2009est.)
$20.92 billion (2008 est.)                                                                                                           $800 (2008est.)

 GDP – real growth rate:                                                                                 GDP – composition by sector:

8.2%(2010est.)                                                                                                  Agriculture: 31.6%
20.9%(2009est.)   Services: 42.1%
3.6% (2008 est.)                                                                                                                       industry: 26.3%

World Bank analytical:

In an attempt to better understand constraints and drivers of growth, the World Bank is currently preparing two analytical reports addressing the challenges the Government and development partners will face in the medium and long term. The report Sustainability of State Building in Afghanistan will look at the current degree of fiscal and capacity reliance of the state on external resources. It will use scenario planning to gain a better understanding of fiscal and institutional sustainability over the next 10 years with view to better understanding the implications of aid flows on service delivery.

The report Economic Growth in Afghanistan will explore the long term drivers of growth in the absence of the market distortions resulting from the security situation. It will deal with the question of how Afghanistan can foster private sector development, agriculture and rural development, as well as ensure that emerging mineral wealth translates into a source of sustainable and inclusive growth.


Afghan (AFG)


20/21 March

Fiscal year

SAARC, Eco negotiating WTO accession

Trade organization

$29.879 billion (2010 est.)


8.9% (2010 est.)

GDP growth

35% (2009)


30.5 % (2009)


15 million (2004)

Labor force

Reference Section Articles

A summary of the speech of Mr Sultan Ali Keshtmand, the President of ARA, at the Annual Meeting held at the Oxford University Conference Hall:

Dear Colleagues:

The Afghanistan Researchers’ Association (ARA), in compliance with its constitution, organizes a rotating annual conference in one of the European cities, and this is the second to the first and the opening seminar held in the Federal Republic of Germany in April 2009. Throughout the year though, specific seminars are held and necessary decisions taken as required of by the Association’s constitution. The seminar held last May in London was one of the series of seminars that the Association organizes. Throughout 2010, the Association intends to extend its seminars and engage in programmes such as debates, discussions, presentations, and academic conferences.

Over the past one year after its establishment, many pressing questions, divisive doubts, and salient paranoia in relation to Association’s engagements and visions have been answered and responded to adequately and clearly, and, the Association has opened its way forward. The key purpose of the Association which is the expansion and promotion of world class research, and dissemination of knowledge amongst the Afghan Diasporas outside Afghanistan, is taking roots and growing slowly yet steadily.

We aim to publish our very first journal under the name of “Research Journal” which will be published every three month — and in this way, we wish to play our role in the expansion of academic research, dissemination of knowledge, and publication of analytical and discursive articles in order to perpetuate and eternalize progressive thoughts via print-media. It is, however, important to note that, while a printed journal not will only belittle the significance of Association’s online publications, they would rather be given increased attention. As in the last few days, Association’s website has been renovated both in structure and content afresh, where you will have an enhanced access to both current and previous publications. The newly renovated website as Association’s “cyber” centre will contain referenced resources and news bibliography, online library and fresh information covering research and other social knowledge.

Dear Friends:

After this short preface, it is relevant to mention that, the general purpose of today’s seminar is the presentation of new research findings on Afghanistan’s history, sociology and culture by the members of the Association and other guests. During this seminar, three young researchers will present their findings. Some of the speakers will engage the areas which they have researched and published on. As a researcher working on a historical piece of research titled “the socio-economic history of present day Afghanistan sine time immemorial”, I will also, present my findings in brief. Parts of the preface to my research have been previously published on Association’s website under the title of “the significance and necessity of understanding and learning history”. Today, I will attempt to shade new light upon the topics that I have researched and will do so in a continuation of the publication as mentioned above.

First of all, I would like to stress the significance of research. When we talk about research, the whole purpose of scientific research which equates human engagement rooted in critical thinking is significant. The main purpose of scientific research lies in exploring, analysing, and endowing an evolution to the methodologies through which human knowledge and intelligence progress and experience expansion. The same said applies to the historical research too.

Recklessness and negligence in carrying out a research, political interference with and insertion of pressure on historical research findings, presentation of incomplete, inaccurate and non-genuine information and data, permutation of political developments, permutation of facts and misleading the people, are amongst the most nefarious and inauspicious phenomena in human history. Afghanistan remains no exception.

Permutation of History in Afghanistan:

The history of the territories which are today known as Afghanistan, has experienced significant peaks and troughs with the passage of time, historical unfolding, and changing political climates by some of the historians who would establish and attempt to maintain a patron-client connection to the authoritarian regimes. It is, however, important to note that, some other dedicated and committed scholars and historians have published and recorded accurately the facts on every swathe of historical occurrences in Afghanistan. On balance, there still remains a lack of collective consensus on the evolution of history and the way it has been passed from one generation to another. The history of these territories independent of time, historical and geographical situation, since primordial, has been of a tailor-made character and has been written as purpose-specific records by the historians who would seek political patronage, better social status, enhanced economic privilege, and above all, racism, prejudice, and inter-ethnic relations would determine the way history was recorded. In the last years, however, some dedicated and committed Afghan historians and researchers have re-opened parts of the Afghan history, re-evaluated, re-analysed, and re-interpreted the historical facts in a more just and fairer approach.

With a galloping innovation and increase in technology and particularly internet, the spirit of writing history and its evolution has entered a new phase. Now, fresh blood and talent have joined the army of historians producing a wide range of critical, discursive, and analytical publications engaging some very crucial areas. A striking character of today’s climate in relation to history writing and history recording is the gradual departure from a climate of fear and utopianism to a climate of more rational and more acceptable research condition. Today, facilitating a more secure, un-biased, and apolitical environment for researching and digging the ground deeper in the search for genuine historical events, is more necessary than ever.

During my historical research, I once proposed and reiterate it here once again that: since in some instances due to a ubiquitous presence of biased treatments of historical developments or due to self-censorship, most of the crystal clear historical occurrences have been shrouded and obfuscated by self-made stories. It is, thus, important that in order to cast light on the contentious historical issues and re-write the half-told or ill-told history and to bring to light the genuinely critical aspects of it, whether new or old, political or economic, cultural and social, a committee encapsulating independent and committed academics, historians, and authors irrespective of their ethnicity, religion, and political opinions should be formed and charged with this responsibility. Let me make it absolutely clear that, the intention is not to re-write the whole history anew, but a selection of selected bibliography and writings of both national and international authors so that a commonly agreed, genuine, critical, accurate, reliable, and a newly edited history can become available for all future references.

At the end, I would like to stress once again the necessity and significance of historical research for Afghanistan where a large part of history, historical realities and developments still remain in serious doubts, and would urge my all fellow citizens, particularly those outside the country to read and re-read their history and explore the genuine realities. It is widely believed that any one able to read no matter what their profession, needs to know history, needs to gain adequate historical knowledge and particularly needs to be aware of their own history, needs to know the historical memory and historical story to the development of the society they belong to.

At the end, I wish you all success in your knowledge-bound projects.


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