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Afghanistan: Learning from a decade of progress and loss

Shubham Chaudhuri's picture
Afghanistan: Learning from a decade of progress and loss


In Afghanistan, the past decade saw remarkable progress, as well as reversals and lost opportunities.

The overall macroeconomic and security context in Afghanistan since 2007 can be broken into two distinct phases, pre- and post- the 2014 security transition, when international troops handed over security responsibilities to the Afghan National Security Forces (ANSF).
 
The pre-transition phase was marked by higher economic growth (GDP per capita grew 63 percent relative to its 2007 value) and a relatively stable security situation.

Since 2014, growth has stagnated, falling below rates of population growth, and the security situation continues to deteriorate. With the withdrawal of most international troops and the steady decline in aid (both security and civilian aid) since 2012, the economy witnessed an enormous shock to demand, from which it is still struggling to recover.

Similarly, welfare can be characterized into two distinct phases.

Finishing the job of ending poverty in South Asia

Hartwig Schafer's picture
This Bangladeshi woman was born in poverty. With the right kind of education, life in poverty quickly became a story from the past for her. Credit: World Bank

"I have a four-year-old son back in my village. I want to make a better life for him,” says Sharmin Akhtar, a 19-year-old employee in one of Dhaka’s many flourishing garment factories.

Like thousands of other poor women, Sharmin came down to Bangladesh’s capital from her village in the country’s north to seek a better job and create a more prosperous future for her family—leaving behind a life of crushing poverty.

Today, as we mark End Poverty Day 2018, it’s important to note that Sharmin’s heartening story is one of many in Bangladesh and the rest of South Asia, where economic growth has spurred a dramatic decline in extreme poverty in the last 25 years.

And the numbers are striking: In South Asia, the number of extreme poor living on less than $1.90 a day dropped to 216 million people in 2015 from 275 million in 2013 and 536 million in 1990.

Even more remarkable, South Asian countries experienced an increase in incomes among the poorest 40 percent of 2.6 percent a year between 2010-2015, faster than the global average of 1.9 percent.

On a global scale, the highest concentration of poor shifted from South Asia to Sub-Saharan Africa in 2012. And India is likely to be overtaken, if it has not already been, by Nigeria as the country with the most people living in extreme poverty.

It’s worth thinking about how far South Asia has come – but remaining clear-eyed about how far we must go to finish the fight against extreme poverty.

Indeed, it is increasingly clear that poverty is more entrenched and harder to root out in certain areas, particularly in rural areas and in countries burdened by violent conflict and weak institutions.

Estimates for 2015 indicate that India, with 176 million poor people, continued to have the highest number of people in poverty and accounted for nearly a quarter of the global poor.

True, the extreme poverty rate is significantly lower in India relative to the average rate in Sub-Saharan Africa. But because of its large population, India’s total number of poor is still large.

And while there has been a substantial decline in the numbers and rate of people living below $1.90 in South Asia, the number of people living on less than $3.20 has declined by only 8 percent over 1990-2015 because of the growing population.

In 2015, 49 percent of the population of South Asia were living on less than $3.20 a day, and 80 percent were living on less than $5.50 a day.

Afghanistan’s prosperity rests on investing in its people

Shubham Chaudhuri's picture
Afghanistan’s prosperity rests on investing in its people
Primary school students are attending their class in northern Balkh Province. Photo credit: Rumi Consultancy/ World Bank

Today, the World Bank Group released the first Human Capital Index (HCI), a new global indicator to measure the extent to which human capital in each country measures up to its full potential.
 
The HCI is part of the World Bank Group’s Human Capital Project intended to raise awareness about the critical role human capital plays in a country’s long-term growth and to galvanize the country’s will and resources to accelerate investments in its people as its most important asset.
 
Afghanistan’s overall HCI indicates it fulfills only 39 percent of its full potential, conceptualized as 14 years of quality education and survival until age 60
 
As dire as this may sound, the overall HCI score places Afghanistan just around a place where it is expected given its income level—in fact, slightly higher than an average low-income country.

How are displaced Afghans faring?

Christina Wieser's picture
Afghans represent the world’s largest protracted refugee population
Afghan returnee families are arriving at a UNHCR registration office in Kabul. Photo Credit: Rumi Consultancy/ World Bank

Afghans represent the world’s largest protracted refugee population, and one of the largest to be repatriated to their country of origin in this century.

More than seven million refugees returned to Afghanistan between 2002 and 2017, mainly from Iran and Pakistan.
 
Afghan returnees now make up as much as one-fifth of the country’s estimated population.
 
At the same time, conflict-induced population displacement within Afghanistan has sharply increased due to the escalation of insecurity across the country. 
 
In an already difficult context, large-scale internal displacement and returnees from abroad have strained the delivery of public services and increased competition for scarce economic opportunities for both the displaced and the rest of the population.
 
Afghans are living under difficult economic conditions. More than half of all Afghans lived below the national poverty line in 2016-17, and many more are vulnerable to falling into poverty.

To support struggling communities through scarce humanitarian and development assistance is challenging but necessary.
 
But policymakers struggle with many questions.

Investing in people of South Asia for prosperity and quality of life

Hartwig Schafer's picture
A little girl in Balochistan, Pakistan, who now receives a quality education thanks to World Bank support. 
A little girl in Balochistan, Pakistan, who now receives a quality education thanks to World Bank support. Credit: World Bank 

Human capital – the potential of individuals – is going to be the most important long-term investment any country can make for its people’s future prosperity and quality of life.

Just look around the world: Technology is reshaping every industry and setting new demands for skills in every profession. The frontier for skills is moving faster than ever before.

To meet that challenge and be able to compete in the global economy, countries need to prepare their workforces now for the tremendous challenges and opportunities driven by technological change.  

To that end, the World Bank will launch next week its highly anticipated Human Capital Index to measure countries’ contribution of health and education to the productivity of the next generation of their workers.

The Index will be released on October 11 at the Bank’s Annual Meetings in Bali as part of the Human Capital Project, a global effort led by the Bank to accelerate investments in people for greater equity and economic growth.

No doubt, any country ranking gets high visibility and, sometimes, meets controversy. But I hope it triggers a dialogue about policies to promote investments in people.

To be clear, the important purpose of the Human Capital Index is to measure the distance of each country to the highest standard of complete education and full health—or the “frontier”.

The index, irrespective of whether it is high or low, is not an indication of a country’s current policies or initiatives, but rather reflects where it has emerged over years and decades.

Put simply, the index measures what the productivity of a generation is, compared to what it could be, if they had benefitted from complete education and good health.

The index ranges from 0 to 1 and takes the highest value of 1 only if a child born today can expect to achieve full health (defined as no stunting and survival up to at least age 60) and complete her education potential (defined as 14 years of high-quality school by age 18).

What it’s like being a female student in Afghanistan today

Nathalie Lahire's picture
Nathalie Lahire attends a class along with students in Abul-Qasim Ferdowsi Girls High School in Kabul
Nathalie Lahire attends a class along with students in Abul-Qasim Ferdowsi Girls High School in Kabul. Photo Credit: World Bank

Afghanistan offers diverse opportunities and challenges for girls depending on where they live and the attitudes toward girls’ education in their community.
 
Further to that, rural or urban infrastructure, the commitment levels of teachers, and the nature or extent of corruption in the community can affect how a female student will perform in school.
 
In general, the past many years of conflict and political unrest in Afghanistan have damaged the country’s education system; eroding the quality of staffing and curriculum.
 
The education sector has been at the forefront of political conflicts and caught in between competing interest groups.
 
As a result, the unfavorable political economy has blocked policy reforms and their implementation, taking a toll on the quality of education services.
 
This has led to weakened governance.
 
Still, enrollment in school districts in Afghanistan is at surprising levels.

Afghanistan makes better nutrition a priority

Michelle Mehta's picture
Community based, preventative approaches to health care will improve stunting and wasting outcomes for Afghan children
Community based, preventative approaches to health care will improve stunting and wasting outcomes for Afghan children.  Photo Credit: Rumi Consultancy/ World Bank

Last year, Afghanistan became the 60th country to join Scaling Up Nutrition (SUN), a global movement to end malnutrition, and thus signaled its strong commitment to invest in a better future for its citizens.

This engagement comes at a critical time as more than 40 percent of Afghan children are currently stunted—or of low height for their age.

Stunting in early life is a marker of poor child growth and development and will reduce their potential to contribute toward their country’s growth and prosperity.

On the other hand, a well-nourished child tends to complete more years of schooling, learns better, and earns higher wages in adulthood, thereby increasing the odds that he or she will escape a life of poverty.[1] 

As such, Afghanistan stands to gain enormous benefits by reducing stunting, which in turn can help boost its economic growth, productivity, and human capital development.

To help the Afghan government invest in better nutrition, the South Asia Food and Nutrition Security Initiative (SAFANSI), the Ministry of Public Health (MoPH), World Bank and UNICEF have partnered to determine what it would take to reach more children, women, and their families and provide them with essential nutrition services that would ultimately reduce stunting and anemia.

Announcing the winners of the 2018 #OneSouthAsia Photo Contest

World Bank South Asia's picture


Home to Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka, South Asia is one of the world’s most dynamic regions.

It's also one of the least integrated.

A few numbers say it all: Intra-regional trade accounts for only 5 percent of South Asia’s total trade; Intra-regional investment is smaller than 1 percent of overall investment.

Technology can help Afghanistan better manage its natural disasters

Julian Palma's picture
 Rumi Consultancy / World Bank
Photo Credit: Rumi Consultancy / World Bank

To associate a gun shot with foul play seems logical. But that’s not necessarily the case in Guldara, a district nearly 40 kilometers outside of Kabul City in Afghanistan.

Gun shots typically come from communities living at the top of the mountain to warn vulnerable downhill communities of potential flooding from the Guldara river. The Guldara river is both a blessing and a curse for the local communities.

Its water is the main source of livelihood since nearly 75 percent of the local economy depends on agriculture. It is also a threat to life and assets. In March 2017, when the mountain snow melted, heavy floods killed two children and washed away the only road that connects the city with Kabul.

South Asia’s transport corridors can lead to prosperity

Martin Melecky's picture
 World Bank
Transport corridors offer enormous potential to boost South Asia’s economies, reduce poverty, and spur more and better jobs for local people, provided the new trade routes generate growth for all and limit their environmental impact. Credit: World Bank

This blog is based on the report The Web of Transport Corridors in South Asia -- jointly produced with the Asian Development Bank, the United Kingdom’s Department for International Development, and the Japan International Cooperation Agency

No doubt, South Asia’s prosperity was built along its trade routes.

One of the oldest, the Grand Trunk Road from the Mughal era still connects East and West and in the 17th century made Delhi, Kabul and Lahore wealthy cities with impressive civic buildings, monuments, and gardens.

Fast forward a few centuries and today, South Asia abounds with new proposals to build a vast network of transport corridors.
 
In India alone—and likely bolstered by the successful completion of the Golden Quadrilateral (GQ) highway system—several transport proposals extending beyond India’s borders are now under consideration. 
 
They include the International North-South Transport Corridor (INSTC), linking India, Iran and Russia, the Asia-Africa Growth Corridor, and the Bangladesh, China, India, and Myanmar (BCIM) economic corridor.
 
The hope is that these transport corridors will turn into growth engines and create large economic surpluses that can spread throughout the economy and society.

Arguably, the transport corridor with the greatest economic potential is the surface link between Shanghai and Mumbai.
 
These two cities are the economic hubs of China and India respectively, two emerging global powers.
 
The distance between them, about 5,000 kilometers, is not much greater than the distance between New York and Los Angeles.
 
But instead of crossing a relatively empty continent, a corridor from Shanghai to Mumbai—via Kunming, Mandalay, Dhaka, and Kolkata—would go through some of the most densely populated and most dynamic areas in the world, stoking hopes of large economic spillovers along its alignment.
 
“Build and they will come” seems to be the logic underlying many massive transport investments around the world.
 
However, the reality is that not all these investments will generate the expected returns.
 
Worse, they can become wasteful white elephants—that is, transport infrastructure without much traffic—that would cost trillions of dollars at taxpayers’ expense.
 
So, how can South Asia develop transport corridors that have a positive impact on their economies and benefit all people along the corridor alignments and beyond?  
 
First, countries need to change the mindset that transport corridors are mere engineering feats designed to move along vehicles and commodities.
 
Second, sound economic analysis of how corridors can help spur urbanization and create local jobs while minimizing the disruptions to the natural environment, is key to developing successful investment programs.
 
Specifically, it is vital to ensure that local populations whose lives are disrupted by new infrastructure can reap equally the benefits from better transport connectivity.
 
The hard truth is that the development of corridor initiatives may involve difficult tradeoffs.
 
For instance, more educated and skilled people can migrate to obtain better jobs in growing urban areas that are benefiting from corridor connectivity, while unskilled workers may be left behind in depopulated rural areas with few economic prospects.
 
But while corridors can create both winners and losers, well-designed investment programs can alleviate potential adverse impacts and help local people share the benefits more widely.
 
In that vein, India’s Golden Quadrilateral, or GQ highway system, is a cautionary tale. 
 
No doubt, this corridor had a positive impact. 
 
Economic activity along the corridor increased and people, especially women, found better job opportunities beyond traditional farming.
 
But this success came at a cost as air pollution increased in the districts near the highway.
 
This is a major tradeoff and one that was documented before in Japan when levels of air pollution spiked during the development of its Pacific Ocean Belt several decades ago.
 
Another downside is that the economic benefits generated by the GQ highway were distributed unequally in neighboring communities.  


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