Is Afghanistan’s Economic Growth A Remarkable Achievement?

When inquiring top government officials about what has been achieved over the past decade, journalists are often reminded of the economic growth that was absent prior to 2001. On the surface, it goes beyond dispute to argue against the officials’ claim. From 2003 to 2012, the real GDP growth averaged 9.2% according to the World Bank. The agriculture and mining sectors have been the emerging sources of the aggregate output growth.

Yet, the crucial segment of this growth originates from foreign aid and pledged financial commitments. The World Bank alone raised over $6.42 billion through Afghanistan Reconstruction Trust Fund to go into development projects, not to speak of the United States, European Union, and other international donors. Putting growth figures in this contextual perspective makes it easier to question whether the aid-driven economic growth has been a remarkable achievement or an achievement at all.

The fundamental question is: has the relationship between the international financial assistance and Afghanistan’s rate of real economic growth been proportional and linear? In other words, what’s been the impact of one more dollar of foreign aid on the economic growth? A less than one-to-one impact? Or, vice versa? Given the level of financial assistance to Afghanistan, is 9.2% an acceptable rate of output growth? Could this be higher? Or lower?

Indeed, figuring out the qualitative and quantitative impacts of foreign aid on economic growth is one of the most important research areas for the Afghan students of economics, business, and development studies. With available empirical data, investigative journalists can better scrutinize the credibility of the claims on whether the growth has been managed by the government.

Such studies might illustrate the flaws in considering the economic growth the government’s remarkable achievement. Any logical mind might ask: is not it a natural side effect of foreign aid? Perhaps, yes. In fact, the most remarkable achievement for the government could/should have been to ensure the sustainability of the economic growth after 2014. However, it remains evident that the unresolved challenge is exactly to sustain the economic growth. With anything that might bother the ones who pay the bills in Afghanistan, therefore, the achievements for which the government claims credit could vanish in the short-run.