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Afghanistan in Transition: Looking beyond 2014
The withdrawal of most international troops by 2014 will have a profound and lasting impact on the country's economic and development fabric. This book explores some of these ramifications. Development progress since 2001 has been mixed. The country has recorded some major achievements such as rapid economic growth, relatively low inflation, better public financial management, and gains in basic health and education. Key social indicators, including life expectancy and maternal mortality, have improved markedly, and women are participating more in the economy. Yet in other respects, particularly governance and institution building, the country has fared less well, and many indicators have worsened in recent years. Afghanistan remains one of the world's least developed countries, with a per capita gross domestic product (GDP) of only $528. More than a third of the population live below the poverty line, more than half are vulnerable and at serious risk of falling into poverty, and three-quarters are illiterate. Additionally, political uncertainty and insecurity could undermine Afghanistan's transition and development prospects. The large aid inflows that have benefited Afghanistan have also brought problems. Aid has underpinned much of the progress since 2001-including that in key services, infrastructure, and government administration-but it has also been linked to corruption, poor aid effectiveness, and weakened governance. Aid is estimated to be $15.7 billion-about the same as the size of the GDP in fiscal year 2011. Despite the large volume of aid, most international spending 'on' Afghanistan is not spent 'in' Afghanistan, as it leaves the economy through imports, expatriated profits of contractors, and outward remittances. Other countries' experience shows that the impact of large aid reductions on economic growth may be less than expected. The main issue for the future is how to manage this change, mitigate impacts, and put aid and spending on a more sustainable path. This book is intended for a wide audience interested in the relationship between conflict, aid and development and how international responses to post-conflict state building and reconstruction may both help and hinder a countries transition out of conflict towards a more stable future.
1114057549
Afghanistan in Transition: Looking beyond 2014
The withdrawal of most international troops by 2014 will have a profound and lasting impact on the country's economic and development fabric. This book explores some of these ramifications. Development progress since 2001 has been mixed. The country has recorded some major achievements such as rapid economic growth, relatively low inflation, better public financial management, and gains in basic health and education. Key social indicators, including life expectancy and maternal mortality, have improved markedly, and women are participating more in the economy. Yet in other respects, particularly governance and institution building, the country has fared less well, and many indicators have worsened in recent years. Afghanistan remains one of the world's least developed countries, with a per capita gross domestic product (GDP) of only $528. More than a third of the population live below the poverty line, more than half are vulnerable and at serious risk of falling into poverty, and three-quarters are illiterate. Additionally, political uncertainty and insecurity could undermine Afghanistan's transition and development prospects. The large aid inflows that have benefited Afghanistan have also brought problems. Aid has underpinned much of the progress since 2001-including that in key services, infrastructure, and government administration-but it has also been linked to corruption, poor aid effectiveness, and weakened governance. Aid is estimated to be $15.7 billion-about the same as the size of the GDP in fiscal year 2011. Despite the large volume of aid, most international spending 'on' Afghanistan is not spent 'in' Afghanistan, as it leaves the economy through imports, expatriated profits of contractors, and outward remittances. Other countries' experience shows that the impact of large aid reductions on economic growth may be less than expected. The main issue for the future is how to manage this change, mitigate impacts, and put aid and spending on a more sustainable path. This book is intended for a wide audience interested in the relationship between conflict, aid and development and how international responses to post-conflict state building and reconstruction may both help and hinder a countries transition out of conflict towards a more stable future.
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Afghanistan in Transition: Looking beyond 2014

Afghanistan in Transition: Looking beyond 2014

Afghanistan in Transition: Looking beyond 2014

Afghanistan in Transition: Looking beyond 2014

Overview

The withdrawal of most international troops by 2014 will have a profound and lasting impact on the country's economic and development fabric. This book explores some of these ramifications. Development progress since 2001 has been mixed. The country has recorded some major achievements such as rapid economic growth, relatively low inflation, better public financial management, and gains in basic health and education. Key social indicators, including life expectancy and maternal mortality, have improved markedly, and women are participating more in the economy. Yet in other respects, particularly governance and institution building, the country has fared less well, and many indicators have worsened in recent years. Afghanistan remains one of the world's least developed countries, with a per capita gross domestic product (GDP) of only $528. More than a third of the population live below the poverty line, more than half are vulnerable and at serious risk of falling into poverty, and three-quarters are illiterate. Additionally, political uncertainty and insecurity could undermine Afghanistan's transition and development prospects. The large aid inflows that have benefited Afghanistan have also brought problems. Aid has underpinned much of the progress since 2001-including that in key services, infrastructure, and government administration-but it has also been linked to corruption, poor aid effectiveness, and weakened governance. Aid is estimated to be $15.7 billion-about the same as the size of the GDP in fiscal year 2011. Despite the large volume of aid, most international spending 'on' Afghanistan is not spent 'in' Afghanistan, as it leaves the economy through imports, expatriated profits of contractors, and outward remittances. Other countries' experience shows that the impact of large aid reductions on economic growth may be less than expected. The main issue for the future is how to manage this change, mitigate impacts, and put aid and spending on a more sustainable path. This book is intended for a wide audience interested in the relationship between conflict, aid and development and how international responses to post-conflict state building and reconstruction may both help and hinder a countries transition out of conflict towards a more stable future.

Product Details

ISBN-13: 9780821398616
Publisher: World Bank Publications
Publication date: 03/14/2013
Series: Directions in Development - Countries and Regions
Pages: 194
Product dimensions: 6.90(w) x 9.90(h) x 0.50(d)

Table of Contents

Preface xi

Acknowledgments xiii

About the Authors xv

Abbreviations xvii

Overview 1

Aid and the Challenge of Transition 1

International Experience and Afghanistan's History 4

Assessing and Managing the Economic Effects of Transition 5

Analyzing the Employment and Poverty Impacts of Transition 8

Responding to the Fiscal Impact of Declining Aid 9

Boosting Government Capacity 12

Delivering Services and Maintaining Infrastructure 15

Key Conclusions and Recommendations 18

Note 21

References 21

Chapter 1 Lessons from History: Afghanistan and Elsewhere 23

Some History 23

International Comparisons 27

Conclusions and Recommendations 43

Notes 44

References 45

Chapter 2 The Economic Impacts of Transition 47

The Economy 47

Aid Dependency 52

Impact of Transition on Economic Growth 55

Risks to Macroeconomic Stability 58

Impact of Transition on Employment 61

Impact of Transition on Poverty 66

Conclusions and Recommendations 71

Notes 73

References 74

Chapter 3 Managing the Fiscal Challenge 75

Fiscal Trends since 2001 76

Medium-Term Projections 81

Closing the Financing Gap 86

Conclusions and Recommendations 90

Notes 91

References 92

Chapter 4 Building Government Capacity: Key Issues and Emerging Challenges 93

International Experience 94

Building a More Effective Afghan State 96

Effect of Transition 107

Conclusions and Recommendations 110

Notes 111

References 113

Chapter 5 Delivering Services and Maintaining Infrastructure 115

Government Presence and Service Delivery in Three Districts 117

Service Delivery in Five Key Sectors 120

Sustaining Service Delivery 132

Conclusions and Recommendations 139

Notes 140

References 141

Chapter 6 Conclusions and Recommendations 143

Appendix A MAMS for Afghanistan: Model Structure and Simulations 149

Methodology: Overview of the MAMS Framework 149

Simulations 151

Annex: Tables for 2010-18 165

Notes 166

References 167

Appendix B Fiscal Technical Background 169

Macro Assumptions 169

Mining Revenue 169

Customs Revenue 170

Value Added Tax 170

Security Wage Bill 170

Civil Service Wage Bill 170

Security Operation and Maintenance Costs 171

Civilian O&M Costs 171

Notes 171

References 172

Appendix C Range of Civil Servants' Remuneration Mechanisms, 2011 173

Boxes

1.1 Somalia's Experience 35

2.1 The Opium Economy 51

2.2 Mining as a Potential Source of Growth 52

2.3 Overview of Scenarios and Assumptions 56

2.4 Limitations of the Model 59

4.1 Some Key International Lessons for Afghanistan 96

4.2 Capacity Building for Results Facility 109

5.1 Key Findings on Service Delivery in Three Districts 118

Figures

0.1 Aid Trends in Afghanistan 2

0.2 External and Core Budgets, 2010/11 3

0.3 Real and Agricultural GDP Growth since 2003/04 5

0.4 Decomposition of Growth in GDP at Factor Cost, by Activity and Scenario, 2010/11-2018/19 6

0.5 Core Budget Projections to 2021/22 10

0.6 Projected Expenditure by 2021/22 10

0.7 Operating and Total Core Financing Gap 11

0.8 Core Operating and Development Budget Execution, 2005/06-2010/11 13

0.9 Share of EFS in Eight Ministries and One Agency, 2011 15

1.1 Trends in Per Capita GDP Growth, Afghanistan and Three Clusters 30

1.2 Extremely High and Growing Aid Dependence 32

1.3 Changes in Life Expectancy and Under-Five Mortality 36

1.4 Deteriorating Rule of Law and Government Effectiveness Indicators 38

1.5 Deteriorating Political Stability Indicator 40

2.1 Real and Agricultural GDP Growth since 2003/04 48

2.2 Aid Trends in Afghanistan 48

2.3 Sector Growth Rates, 2003/04-2010/11 49

2.4 Sector Contribution to GDP Growth 50

2.5 Aid versus GDP per Capita, Average of 2006-08 53

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