Editor in Chief: Moh. Reza Huwaida Sunday, September 27th, 2020

Afghanistan Consumes More Than It Produces

Every day Afghan Consumers and households are bombarded by advertising foreign products. TVs, radios and newspapers are mostly dedicated to those foreign products imported by Afghan traders and rarely one can see that a national product is advertised through media and Afghanistan consumes more than it produces. Free market economy and open trade regimes are known as key factors in the development process of Afghanistan economy.

But in this scenario, the country has weak position vis-à-vis its regional and international trading partners. Afghan products with negligible share into domestic market, have no place in international markets; the quantity of goods exported abroad is decreasing each year as trade deficit is huge and Afghanistan is in an unfavorable situation vis-à-vis its major trade partners.

Although, Afghanistan benefits from the majority of the western countries placing no tariffs on its products (Generalized System of Preferences), but Afghan products do not meet the required standards to be exported to these countries, products do not yet have a competitive advantage in the global economy and most of the country's economic institutions, businesses, and infrastructures are weak. In addition, Afghan producers don't have necessary marketing support in order to find better markets outside the region. Ultimately, Afghanistan, as landlocked country, doesn't have cost-efficient access to the world market.

Additionally, This country, generally characterized by features such as exports of low value-added raw materials, poor technological capability, narrow base of domestic entrepreneurship, poor competitiveness of their fledgling industries, poor infrastructure, lack of access to skilled labors, and shortage of resources.

Moreover, Poor governance, extended internal conflict, difficult post-conflict transition, widespread lack of security, fractured relations among societal groups, significant corruption, breakdown in rule of law and huge backlog of investment puts the country, more than ever, in need of creative policies to generate revenue, create jobs and develop its industrial capacity for sustainable development.

With such a poor position, Afghanistan expects to benefit from opening market. Up to date, this country has seen a sudden decrease in productivity and great loss of jobs, which resulted in increased poverty and trade liberalization increased imports far more than exports.

Policy makers, stakeholders and advisors, gathering at Afghanistan Chamber of Commerce and Industry (ACCI) for Assessment conference of balance of payment should consider sustained development and poverty reduction. Afghanistan might avoid following policy mistakes that remain in the trap of poverty. It should avoid trade-lead development and focus on development-lead trade.

Today, the central question for country like Afghanistan is not so much how they may achieve further liberalization of their trade regime; rather it is how they can effectively promote development with a relatively open trade regime.