Afghanistan: out of the globalisation mainstream?

Abstract

One of the poorest countries in the world, the people of Afghanistan gained a chance for peace with the collapse of the Taliban. Whether the country can find its way forward from a precarious position to a democratic and peaceful future will depend on how it responds to the challenge of globalization and constructs a viable economic system. The rate of economic growth and integration into the world capitalist economy for developing countries depends primarily upon any given country's political capacities. Afghanistan ranks low on all three indicators of political capacity: extractive capability, institutional credibility, and transparency. Globalization is a multifaceted process. In its ability to compete in the global economy, Afghanistan is beginning the contest in arrears with little political capacity and experience in capitalist, market-based economics. Often buffeted historically by external forces and actors, two global wars are intersecting in the country today: those of narcotics and terrorism.

Notes

1 Clement M Henry & Robert Springborg, Globalization and the Politics of Development in the Middle East. Cambridge: Cambridge University Press, 2001, p 63.

2 Economic growth and development are by and large considered to be sought-after processes; and the terms are often used interchangeably in demonstrating economic progress. However, growth and development are actually two vastly different occurrences. Whereas growth describes an increase in volume or output, development is generally understood to mean human development and concerns issues of distribution. Development is a broad concept that is measured by composite indices such as the Physical Quality of Life Index (pqli) and the Human Development Index (hdi). A measure providing a different perspective on poverty is the Gender Adjusted Development Index (gdi).

3 Henry & Springborg, Globalization and the Politics of Development, pp 75 – 83.

4 World Bank, Afghanistan: State Building, Sustaining Growth, and Reducing Poverty: A Country Economic Report, Poverty Reduction and Economic Management Sector Unit: South Asia Region, Report No 29551-AF, Washington, DC: World Bank, 2004, p 5. Reliable statistics are hard to come by. Notice the higher estimate for opium farming as a percentage of gdp in the following paragraph by the imf. Analysis of the Afghan economy is hindered by severe data limitations.

5 Economist Intelligence Unit (eiu), Country Report: Afghanistan, London: eiu, 2005, pp 17 – 18.

6 eiu, Country Profile: Afghanistan, London: eiu, 2004, pp 28 – 29.

7 Barnett R Rubin, Humayun Hamidzada & Abby Stoddard, Afghanistan 2005 and Beyond: Prospects for Improved Stability Reference Document, The Hague: Netherlands Institute of International Relations Clingendael, 2005, p 43.

8 Manabu Fujimura, Post-Conflict Reconstruction: The Afghan Economy, Tokyo: Asian Development Bank, 2004, p 30.

9 Ibid, p 75.

10 Simon Cameron-Moore, Even in Afghanistan Taxes are as Sure as Dealth, Reuters, Kabul, 3 May 2005.

11 Ministry of Finance, Financial Report: 4th Quarter 1380 – 2nd Quarter 1383 (21 January 2002 – 20 September 2004), p 10, at www.af/reports/financialreports/index.htm. The Afghan government expects to raise $333 million in tax revenue in 2005, less than the amount targeted by the city of Columbus, OH, with a population of about 745 000. Simon Clark, Karzai's Afghanistan, Poisoned by Heroin Habit, Seeks Investors, 21 March 2005, at Bloomberg.com.

12 The national budget relies largely on external assistance provided by donors. The Ministry of Finance created the concepts of a core budget, the portion of the national budget that is controlled by the government, and an external budget, the portion of the budget that flows outside of government accounts, to better explain the flow of resources to Afghanistan. See Ministry of Finance, Financial Report, p 4.

13 Since the US-led invasion, Afghanistan has depended on donor aid for survival. In March 2004 the USA, Japan, German, the UK and other countries pledged $8.2 billion over three years to Afghanistan. Karzai had asked for $27.5 billion over seven years. Clark, Karzai's Afghanistan.

14 A new currency was intended to eliminate the problem of regional currencies: in northern Afghanistan, General Abdul Rashid Dostum and a former president, Burhanuddin Rabbani, printed their own version of the afghani. dab would announce that the northern notes could also be traded in for the new notes.

15 Anne Carlin, Rush to Reengagement in Afghanistan: The ifis' Post-Conflict Agenda: With a Special Focus on the National Solidarity Program, Washington, DC: Bank Information Center (bic), 2003, p iv.

16 Fujimura, Post-Conflict Reconstruction, pp 77 – 79.

17 Henry & Springborg, Globalization and the Politics of Development, pp 78 – 79.

18 As a result of more than two decades of war and conflict, Afghanistan's entire statistical system had broken down and the administrative reporting system had come to a halt. Today the statistical services are beginning to improve; but there are no effective statistical offices in key ministries. The Central Statistical Office (cso), composed of nine departments and about 700 people in total, is poorly trained, with most lacking the necessary qualifications and experience. Fujimura, Post-Conflict Reconstruction, p 121.

19 Hawala is an informal money transfer system. In the most basic type of hawala system money is transferred via a network of hawala brokers, or hawaladars. A customer approaches a hawala broker in one city and gives a sum of money to be transferred to a recipient in another, usually distant, city.

20 Fujimura, Post-Conflict Reconstruction, pp 79 – 80.

21 Rubin et al, Afghanistan 2005 and Beyond, p 15. The Bonn Agreement required the interim administration to establish a central bank to release currency in a transparent and accountable fashion. The Afghan government successfully carried out this major reform in less than a year (p 44).

22 eiu, Country Report: Afghanistan, p 17.

23 ‘Water is muddy from the source’. This Afghan saying refers to corruption, which is endemic and seen as the usual form of business transaction. Bribery is widely considered to be common among the police force, within the judiciary, public utilities and, according to some observers, even with the national airline. World Bank, Afghanistan: State Building, Sustaining Growth, and Reducing Poverty, p 44.

24 Embassy of the United States of America, Economic/Commercial Section, Doing Business in Afghanistan: A Country Commercial Overview, 2005, at www.state.gov, p 3.

25 Costs, which are not proportional to the number of units produced.

26 Elham Ghashghai & Rosalind Lewis, Issues Affecting Internet Use in Afghanistan and Developing Countries in the Middle East, Rand Issue Paper, Santa Monica, CA: Rand, 2002.

27 Ibid, p 4.

28 Ibid, p 5.

29 The number of cellular phone subscribers nationwide in Afghanistan is not significant, although there were roughly 600 000 in 2005 in Kabul, Telecom Regulatory Board, Afghanistan. Telecommunications: Afghanistan Country Report, Kabul: Ministry of Communications, April 2005.

30 United Nations Development Programme (undp), ‘The Information Age dawns on Afghanistan: computer terminals and internet access provide tools for reconstruction, 2003, at www.undp.org/dpa/choices/2003/december/afghanistan_prfr.html.

31 Freedom House, ‘Afghanistan’, 2003, at www.freedomhouse.org/research/freeworld/2004/countryratings/afghanistan.htm. For the first time since the fall of the Taliban's Islamic government a journalist has been convicted by a Kabul court under the country's blasphemy laws. Ali Mohaqiq Nasab, the editor of a monthly magazine for women called Women's Rights, was sentenced Saturday 22 October to two years in prison by Kabul's primary court. ‘Afghanistan: Afghan court convicts editor of blasphemy’, Asia Media, 25 October 2005, at www.asiamedia.ucla.edu/article.asp?parentid=32235.

32 Goinaz Esfandiari, ‘Afghanistan: media expand rapidly but still face intimidation’, violence, Prague: Radio Free Europe/Radio Liberty, 6 January 2005, at www.rferl.org/featuresarticle/2005/01/e0838ffc-43e8-423c-a723-315bccdae2d9.html.

33 Henry & Springborg, Globalization and the Politics of Development, p 83.

34 Despite an externally imposed planned economy in certain periods of its modern history, Afghanistan has a long tradition of entrepreneurship and a vibrant private sector, which has actively engaged in agricultural production, trading activities and small-scale industrial activity over the centuries. An initial condition for restoring Afghanistan's private sector vitality is to consolidate security and political stability throughout the country. Equally important is the establishment of a strong judicial system able to enforce laws and regulations effectively with fair, transparent and simple rules with regard to the banking system, tax and customs, competition protection, property registration and foreign investment. Fujimura, Post-Conflict Reconstruction, p 94.

35 undp, Opening Doors to Opportunity: Afghanistan's Millennium Development Goals, Kathmandu: Worldscape, 2004, p 44.

36 Fujimura, Post-Conflict Reconstruction.

37 Paul Collier & Anke Hoeffler observe that super-normal economic growth tends to be seen in post-conflict countries. This follows an inverted-U pattern and is typically at peak levels from the fourth to the seventh year of peace. Consequently, after the first few years, a period of catch-up can be expected, which fades over time as the economy reverts to some longer-term growth rate. The postponed onset of relatively high economic growth after the conflict most likely reflects the time it takes for business and investor confidence to be restored and for the institutional and infrastructural base of the economy to be rebuilt. Paul Collier & Anke Hoeffler, Aid Policy, and Growth in Post-Conflict Societies, Washington, DC: World Bank, 2002. Afghanistan's growth soared in the first years following the collapse of the Taliban, thus departing somewhat from this model. It is, however, in all probability headed for a longer-term, sustainable and more modest growth rate.

38 The eiu reports as many as three million refugees in 2003/04. eiu, Country Report: Afghanistan, p 8.

39 World Bank, Afghanistan: State Building, Sustaining Growth, and Reducing Poverty, p 3.

40 According to Barnett R Rubin and colleagues, illicit activities have stimulated much of the growth in construction and trade. The sustaining function of illicit commodities demonstrates the challenge the Afghan government confronts in seeking to augment economic stability, while at the same time promoting the rule of law necessary to the growth of the legal economy, which is anchored chiefly in private investment. Barnett R Rubin, Abby Stoddard, Humayun Hamidzada & Adib Farhadi, Building a New Afghanistan: The Value of Success, the Cost of Failure, New York: Center on International Cooperation/New York University, in cooperation with care, 2004, p 8.

41 eiu, Country Report: Afghanistan, p 8.

42 World Bank, Afghanistan: State Building, Sustaining Growth, and Reducing Poverty, pp 7 – 8.

43 Clark, Karzai's Afghanistan.

44 World Bank, Afghanistan: State Building, Sustaining Growth, and Reducing Poverty.

45 Rubin et al, Afghanistan 2005 and Beyond, p 25.

46 Ibid.

47 Ibid, p 26.

48 Ibid, p 25. Women also voted in the 2004 presidential election. When results of the 2004 parliament elections are certified, 68 women will serve in the lower house, the Wolesi Jirga.

49 Rubin et al, Afghanistan 2005 and Beyond, p 25.

50 Henry & Springborg, Globalization and the Politics of Development, p xiv.

51 A group united by a norm of solidarity within the group and by competition with parallel groups. Depending on context, the term can refer to tribe, clan, ethnic group, regional group, or professional caste. Barnett R Rubin, The Fragmentation of Afghanistan, New Haven, CT: Yale University Press, 2002, p 346.

52 Michael Bhatia & Jonathan Goodhand, with Haneef Atmar, Adam Pain & Muhammad Suleman, ‘Profits and poverty: aid, livelihoods and conflict in Afghanistan’, in Sarah Collinson (ed), Power, Livelihoods and Conflict: Case Studies in Political Economy Analysis for Humanitarian Action, hpg Report 13, London: Humanitarian Policy Group, 2003, p 70.

53 Afghanistan currently imports electricity from neighbours Iran and Uzbekistan. The power lines from each, however, operate on different voltages, preventing the creation of a national network. Clark, Karzai's Afghanistan.

54 Fujimura, Post-Conflict Reconstruction, pp 41 – 42.

55 Ibid, pp 73 – 75.

56 Clark, Karzai's Afghanistan.

57 Ibid.

58 Unocal Corp, an El Segundo, CA-based oil and natural gas producer, and Bridas, an Argentinian firm, sought to contract with the Taliban in the mid-1990s to build a gas pipeline from Turkmenistan across Afghanistan to Pakistan. Both dropped the idea a few years later.

59 Clark, Karzai's Afghanistan.

60 Ibid.

61 Ibid.

62 In recent years the USA has cultivated links (civil or military aid, including bases for US troops in some instances) to a number of Central Asian countries—including Afghanistan, Azerbaijan, Kazakhstan, Kyrgyzstan, Pakistan, Turkmenistan and Uzbekistan—that either have important undeveloped oil reserves or straddle key potential pipeline routes. World Watch Institute, State of the World: Redefining Global Security 2005, New York: WW Norton, 2005, p 134.

63 Ricardo Hausmann, ‘Prisoners of geography’, Foreign Policy, January/February 2001, pp 44 – 53.

64 At least to neoliberals and those who back the Washington Consensus, who are currently in positions of power globally.

65 World Bank, Afghanistan: State Building, Sustaining Growth, and Reducing Poverty, pp. 2 – 3.

66 The hdi combines longevity as measured by life expectancy at birth, knowledge as measured by a weighted average of adult literacy and combined gross enrolment in school and standard of living as measured by real per capita income adjusted for a country's ppp (Purchasing Power Parity). Recent pqli statistics were not readily found for Afghanistan.

67 The gdi reflects the level of discrepancies between men and women in terms of the hdi indicators.

68 undp, Afghanistan: National Human Development Report, Islamabad: Army Press, 2004, pp 18 – 23.

69 For undp, security is not just the end of war but the ability to survive, have a chance to live a life of dignity, and have an adequate livelihood. Ibid, p xxv.

70 Ibid, p 46.

71 Ben Arnoldy, ‘Afghans left out of their own rebuilding’, Christian Science Monitor, 24 May 2005, pp 1, 4.

72 The terms globalisers, moralisers, and synthesisers in response to globalisation were conceived by Henry & Springborg, Globalization and the Politics of Development, pp 18 – 19.