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Consequences of conflict in Afghanistan continues.....
Afghanistan’s traditional economy was mainly based on agriculture and animal husbandry. The country has a low population density due to difficult topographical and climatic conditions (high mountains covering most of the country, extremes of temperatures, and arid to semi-arid climate). Agriculture was largely concentrated in narrow river valleys and plains where irrigation water from snowmelt was available.
Manufacturing industry was largely undeveloped, with only a few plants established (in textiles, medicines, cement).
Afghanistan’s strategic position during the Cold War period made it a large recipient of foreign aid, which funded the running of the state without substantial domestic taxation. Macroeconomic policy was balanced, with budget surpluses, a market-based, competitive exchange rate and modest foreign and domestic debt. As a result of foreign aid, the country had a relatively good road network, as well as some other infrastructure including major irrigation and hydroelectric facilities.
This modern infrastructure, however, did not extend beyond the main arteries and urban centres. Social and other services (such as education and health) were largely limited to the relatively small urban pockets.
The low level of internal trade and integration among the different regions of Afghanistan had been a concern of Afghan national planners after World War II. The first developmental plans after the war focused on building infrastructure, such as roads, power stations, and banks. These moves to modernize and boost the country’s output allowed Afghanistan to achieve a slow but steady rate of growth in the 60’s and most of the 70’s.
Although many communities remained virtually unaffected, most regions that had formerly relied solely on barter trade became commercialized, and internal trade grew rapidly. Afghanistan’s development drive was spurred by large foreign aid, but poor domestic resource mobilization.
Large amounts of arable land remained uncultivated, and the nation’s mineral resources were marginally exploited, with the exception of natural gas. Skilled labour was in constantly short supply despite underemployment in the countryside. The budget remained dependent on foreign aid, and domestic revenue sources went untapped.
To be continued.......