Trading in Power: The Politics of “Free” Markets in Afghanistan
Introduction
The limited analysis of Afghanistan’s political economy has focused extensively on the illicit narcotics sector and has not sufficiently addressed informal sector issues. As a result, three important characteristics of the Afghan economy have been widely neglected: participation in the market is not open to all, benefits are spread unevenly among participants, and the country’s market structures in their current state undermine governance and state-building.
These factors have the potential to seriously impede both the democratic and economic development of Afghanistan. The key concern of policymakers has been to create a light regulatory state to promote private sector growth, hoping that competitive pricing and market efficiency will eventually arise out of the forces of supply and demand. It is imperative that policymakers consider the broad political implications of such growth, which may not necessarily be free and equitable, rather than simply assuming that the market will lead to a democratic and prosperous society.
The current approach has stripped the market of its wider dimensions and has underestimated the strength of the informal sector and trade patterns that developed over generations. It neglects aspects of market performance that depend on extra-market conditions, including cultural factors that exclude many people from entrepreneurial participation. These factors include social relationships, gender relations, ethnic identities, and spatial patterns of production. It ignores the idea that the current patterns of economic growth could potentially destabilize the country.
This article is based on a longer study, “Trading in Power: The Politics of ‘Free’ Markets in Afghanistan” by Sarah Lister and Adam Pain of the Afghanistan Research and Evaluation Unit. It was previously published in the autumn 2006 issue of CIPE’s Afghanistan Economic Reform Feature Service Magazine. To read the full version, please visit www.areu.org.af.
The Afghanistan Research and Evaluation Unit (AREU) is an independent research organization headquartered in Kabul. AREU’s mission is to conduct high-quality research that informs and influences policy and practice. AREU also actively promotes a culture of research and learning by strengthening analytical capacity in Afghanistan and facilitating reflection and debate. AREU works to ensure that its findings are relevant to process of change taking place on the ground. Fundamental to AREU’s vision is that its work should improve Afghan lives.
AREU was established by the assistance community working in Afghanistan and has a board of directors with representation from donors, the UN and other multilateral agencies, and non-governmental organizations (NGOs). Current funding for AREU is provided by the European Commission (EC), the United Nations High Commissioner for Refugees (UNHCR), the World Bank, and the governments of Denmark, Norway, Sweden, Switzerland and the United Kingdom.
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The views expressed by the authors are their own and do not necessarily represent the views of the Center for International Private Enterprise. The Center for International Private Enterprise grants permission to reprint, translate, and/or publish original articles from its Economic Reform Feature Service provided that (1) proper attribution is given to the original author and to CIPE and (2) CIPE is notified where the article is placed and a copy is provided to CIPE’s Washington office via mail, e-mail, or fax.
