Afghanistan Needs Economic System Change or???

August 19, 2017 | Autor: Reshad Hakim | Categoria: Political Economy
Share Embed


Descrição do Produto

Afghanistan needs Economic system change or Correction of policies?
Structural changes is always a matter of long term but policies amendment are required from time to time. Afghanistan is already on a false economic runway since it chose open market economy. Now just switching to another system is not advisable in short and medium terms but long term. The best success path for undeveloped countries is to make a division of sectors into two. first, Control and plan centrally sectors such as agriculture, Transportation, housing and Energy. Second provide a competitive environment for 2nd degree sector industries. The process of privatization and globalization will be enlarged on assessment of results. Afghanistan urgently needs to reform a lot of ongoing policies with a joint and slow process of structural changes .
1. Introduction
Afghanistan`s economy has been influenced by either war or overwhelming financial dependence since 1950s. During cold war, Afghanistan was receiving almost its 80% of funds as financial aid form USSR and USA and during War economy period (1989-2001), all major economic resources were owned and put into use by militants through a choice of their own.
The era 2001 onwards is a remarkable time for Afghanistan on account of Economic Growth. The amount of production and income of residents (GDP/ per capital income) have risen unprecedented. Comparing the growth rate with neighboring countries and many post conflict countries, Afghanistan is on top. But we do not have to get so delighted about it because we have lost a lot in response. The growth is dominantly because of cheap money flood into country and this money flood is not intended for economic growth but for political reasons. The growth is a lot artificial due to some reasons. Firstly as one fourth of the money invested is not put into good use, either the sector has been selected incorrectly or the project is not implemented properly, for example, money spent on women rights and media is more than money invested in agriculture sector and millions have been invested to make Salma Dam in Herat or electronic ID cards but none are on the right track) . secondly, Almost half of the projects implemented are not considered for maintenance, it means as soon as the projects life is over, the work done is not maintained such as irrigation systems and potable water supply, as the water wells are dug in a village and pumps have been installed, the installed tools and the wells will require maintenance in next few years but there will be no one to take care of it. A project Called Agriculture Support for Peace and Reintegration (ASPR) invested around USD 25 million during 2011-2013 and implanted around 70000 plants of pistachios and nuts but no proper maintenance plan exists to take care of the forests created as the project steps out, it is expected to see half of the plants dried by 2015.
In short, the growth achieved so far is very shaky, unsustainable and purely dependent to foreign aid. Such growths have never been helpful to revive war torn economies and the other negative side of such growth is The economic empowerment of the elite class in power and monopolization of basic economic goods by mafia. In the current growth scenario of Afghanistan, equality, efficiency, transparency, legality hardly exists.

2. Assessment of fallacies of policies on inter(national) Level
The current situation is basically being affected by certain policies adopted and weaknesses in good governance. Afghanistan will continue paying a high cost for the below vital policy mistakes on international level:
Choosing open market economy at the time of drafting the constitution
Borrowing and accepting large amounts of grants form IMF and world bank
Joining WTO (world Trade Organization)
IMF and WTO are actually force measures for a underdeveloped economy for the benefits of its founders, not a angle of support. The reasons are many. Undeveloped Countries having opted for open economy at start up are victims for world trade giants and are always fragile. lets see the big picture and imagine the economy if free and cheap assistances are over. It is proved that having home grown industries, competition capacity and the ability to survive during recessions and bad times is impossible.
Now, what is our flaws on national level. Policy making boards are too many and have failed to coordinate, let's take an example: Exports promotion Agency of Afghanistan (EPAA) facilitates export promotion, central bank (DAB) attempts to rescue the currency form being depreciated, Ministry of Commerce joins World Trade Organization for free trade and Ministry of Finances is raising taxes, Afghanistan chamber of commerce and industry(ACCI) is entrusted with supporting domestic corporate. These are nullifying each other on country level.
3. Recommendations & conclusion
I suggest the below reforms for moving toward real economic growth and sustainability.
In short term (1-2 years)
We need to reduce economic planning bodies and get the tasks concentrated so each policy made is in full coordination with other stakeholders and compliant with the main economic objective.( Exports promotion Agency of Afghanistan (EPAA) facilitates export promotion, central bank (DAB) attempts to rescue the currency form being depreciated, Ministry of Commerce joins World Trade Organization for free trade and Ministry of Finances is raising taxes, while Afghanistan chamber of commerce and industry(ACCI) is entrusted with supporting domestic corporate).
Sectors have to get prioritized for economic attention. As far as financial resources and implementation capacity is limited, Resources need to be allocated according to top priorities . Agriculture is the very first sector to be rehabilitated. The energy sectors (Electricity ,gas and oil ) are the second to attract investment and reach sufficiency level. Currently Agriculture makes the least contribution to GDP (20%) while the highest percentage of population is employed by this sector. The policy of all together does not work.
Remarkable protection need to be given to domestic companies to be saved form dumping risk. Agriculture, energy sectors must be highly protected from competitors by levying Tariff and Quote barriers on import substitutes. Spin Ghar oil company is a good example of quality domestic production but unable to survive. 30% reduction of wheat/flour, vegetables and fruits , cooking oil, pharmaceuticals imports is required to encourage domestic farmers/producer for its cultivation and processing.
In medium term (2-3 years)
changing article 10 of the constitution. Afghanistan does not need open market economy now.
Limitation of current and capital account convertibility. we need to make local currency dominant by hook or by crook.
100% ban on luxury products.

In Long term (4-7 years)
100% ban on agricultural goods import(except machinery).
Restriction on export of primary goods before domestic consumption is met.
Housing and Transportation industry need to be monopolized by government to ensure reasonable prices and accommodation for all. This will avoid unnecessary and expensive investments on properties.
Leaving WTO

The ultimate aim of any Muslim is the rule of Allah aza wa jal. Islam is very clear about wealth and resource management based on which the wealth will be distributed fairly, justice and honesty will be the main pillar, avoidance of Harram and unnecessary wants will be desired by all, to conclude Economics of Islam is the solution to society`s economy.


Lihat lebih banyak...

Comentários

Copyright © 2017 DADOSPDF Inc.