Aid, expatriates and the Afghan Economy

On December 22, 2001, an interim administration under Hamid Karzai mandated from above under the Bonn peace argeement took charge of Afghanistan. The country's economy had already disintegrated at the time of formation of the interim administration. The economy in 2002 was seen to be structurally at an early stage of modern development with 85 percent of the population reportedly dependent on agriculture and 53 percent of the GDP estimated to be originating in agricultural, livestock and forestry. As against this, light industry contributed 28 percent, trade 8 percent and construction 6 percent. Extremely rough estimates quoted by the Asian Development Bank (ADB) suggest that in 2002, Afghanistan´s GDP amounted to USD 4.4 billion. Per capita this works out to an abysmally low USD 170 per head.

These figures, however, could overstate the level of backwardness implicit in the initial conditions from which Afghanistan must begin its process of reconstruction and revival. Two factors have contributed to the high "aggregate poverty" indicated by a per capita income that is less than half of the international poverty norm of a dollar per day per head by 2001. The first is the war that led to the ouster of the Taliban. An earlier estimate, also quoted by the ADB, relating to 1989, placed Afghanistan´s GDP at a much higher USD 6.9 billion and its per capita income at around USD 300. The situation could have further improved in the years following 1989, since reports indicate that at least in regions fully occupied by the Taliban, economic conditions were stable during the early and the mid-1990s.